• Knave Dave
    05/23/2016 - 18:16
    This past Thursday marked the one-year anniversary of the US stock market’s death when stocks saw their last high. Market bulls have spent a year looking like the walking dead. They’ve...

Chinese Shipyards "Vanish" As Baltic Dry Collapses To New Record Low

Tyler Durden's picture




 

Another day, another plunge in The Baltic Dry Index, which just dropped a further 3.1% to 402 today - a new record low. While the index is driving headlines, under the surface, reality in the shipping (and shipbuilding) industry is a disaster. Total orders at Chinese shipyards tumbled 59% in the first 11 months of 2015, and as Bloomberg reports, with bulk ships accounting for 41.6% of Chinese shipyards’ $26.6 billion orderbook as of December, there is notably more pain to come, as one analyst warns "Chinese shipbuilders won’t be able to revive even if you try breathing some life into them."

 

Baltic Dry Bloodbath...

 

About 140 yards in the world’s second-biggest shipbuilding nation have gone out of business since 2010, and more are expected to close in the next two years after only 69 won orders for vessels last year, JPMorgan Chase & Co. analysts Sokje Lee and Minsung Lee wrote in a Jan. 6 report. That compares with 126 shipyards that fielded orders in 2014 and 147 in 2013.

As Bloomberg reports, the weakening yuan and China’s waning appetite for raw materials have come around to bite the country’s shipbuilders, raising the odds that more shipyards will soon be shuttered.

“The chance of orders being canceled at Chinese yards is becoming greater and greater,” said Park Moo Hyun, an analyst at Hana Daetoo Securities Co. in Seoul.

 

“While a weaker yuan could mean cheaper ship prices for customers, it still won’t be enough to lure back any buyers. Chinese shipbuilders won’t be able to revive even if you try breathing some life into them.”

And it is not going to get better anytime soon...

Bulk ships accounted for 41.6 percent of Chinese shipyards’ $26.6 billion orderbook as of Dec. 1, according to Clarkson Plc, the world’s largest shipbroker.

 

 

That compares with a 3.5 percent share at South Korean shipyards, which have more exposure to the tankers and gas carriers that are among the few bright spots in a beleaguered shipping industry.

Builders have sought government support as excess vessel capacity drives down shipping rates and prompts customers to cancel contracts. Zhoushan Wuzhou Ship Repairing & Building Co. last month became the first state-owned shipbuilder to go bankrupt in a decade.

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Tue, 01/12/2016 - 16:22 | 7036370 pickatheweek
pickatheweek's picture

Another day another farcical 3:30 ramp.  F-CK -FF -OTHERFUCKERS!

Tue, 01/12/2016 - 16:25 | 7036383 Eyeroller
Eyeroller's picture

3:30 has become 3:20 ramp...

Tue, 01/12/2016 - 16:28 | 7036395 tmosley
tmosley's picture

The real reason China is suddenly interested in building aircraft carriers?

Tue, 01/12/2016 - 16:42 | 7036455 ZerOhead
ZerOhead's picture

Forget the aircraft carriers... they will be hiding the People's Army inside shipping containers.

Tue, 01/12/2016 - 16:58 | 7036569 WayBehind
WayBehind's picture

No worries guys, the bigger the bubble, the bigger the pop ... its coming sooner than later. Be ready!

Tue, 01/12/2016 - 16:49 | 7036517 Consuelo
Consuelo's picture

 

 

They have found (as have the Russians) that fueled projectiles like DF-21's and S-400's are much cheaper to build, operate, transport and ultimately use.   The 'security' of an aircraft carrier battle group just ain't quite the same as it used to be...

Tue, 01/12/2016 - 16:28 | 7036398 NoDebt
NoDebt's picture

You're allowed to say fuck on here without blanking out letters.  We're all adults here.

Tue, 01/12/2016 - 16:29 | 7036407 nuubee
nuubee's picture

Protecting children from cursewords is safe-spacing. Frankly, fuck the kids ears, let them hear how adults speak.

Tue, 01/12/2016 - 16:30 | 7036410 Dr. Engali
Dr. Engali's picture

All adults here? Speak for your self, I like being an immature 52 year old. 

Tue, 01/12/2016 - 16:39 | 7036454 Dr. Spin
Dr. Spin's picture

Here ya go, 8 of 9 words in a sentence:  Fuck the fucking fuckers, fuck fucketty fuck fuck fuck.

;-)  

Tue, 01/12/2016 - 16:42 | 7036479 uhb
uhb's picture

+10e6.

Tue, 01/12/2016 - 17:00 | 7036584 db51
db51's picture

Fuck.

Tue, 01/12/2016 - 18:31 | 7037276 roadhazard
roadhazard's picture

punk kid.

Tue, 01/12/2016 - 16:35 | 7036435 _ConanTheLibert...
Tue, 01/12/2016 - 16:39 | 7036459 NoDebt
NoDebt's picture

I never saw that before.  It's fantastic.  Thank you.

Tue, 01/12/2016 - 16:40 | 7036466 Dr. Engali
Dr. Engali's picture

I remember that. Fuck, we're getting old.

Tue, 01/12/2016 - 16:47 | 7036512 _ConanTheLibert...
_ConanTheLibertarian_'s picture

Sadly we do

Tue, 01/12/2016 - 17:00 | 7036571 db51
db51's picture

Fuck

Tue, 01/12/2016 - 16:38 | 7036449 RadioFlyer
RadioFlyer's picture

Ramp twice a day, its good for your prostate.

Tue, 01/12/2016 - 16:27 | 7036386 TAALR Swift
TAALR Swift's picture

Should do wonders for the next gen of super-freight ship demand, right?

Who will pay for them? And who will buy them at the auction sale afterwards?

Tue, 01/12/2016 - 16:27 | 7036391 NoDebt
NoDebt's picture

The coming naval conflict in the S China Sea should do wonders clearing old ships off the books.

Tue, 01/12/2016 - 16:31 | 7036417 Dr. Engali
Dr. Engali's picture

You're really getting under my skin.

Tue, 01/12/2016 - 16:33 | 7036423 NoDebt
NoDebt's picture

;)   You gotta be quick!

Tue, 01/12/2016 - 21:30 | 7038015 83_vf_1100_c
83_vf_1100_c's picture

  One would think within a year 40' containers would get cheap. I would love 3 of them for storage and maybe a man's 'doghouse' apt. Don't expect it to happen though. I have been waiting on drill stem to drop in price, ain't happened yet. With the frackers shut down the market here in East TX should be glutted with pipe.

  For China's sake I hope they don't use the carrier program like they did their ghost cities, big floating shell that can't do it's job but looks good on paper. Bad timing to launch a major ship acquisition for them given the numbers. Could be a few unfinished ships in a few years rusting away at the defunct shipyard.

Tue, 01/12/2016 - 16:27 | 7036389 Takeaction2
Takeaction2's picture

Just got back from Costco...a Pack of Organic chicken breasts...$31.42  Really?  And gas is $2.14 a gallon.....  Portland Oregon.  Shouldn't gas be under a buck?  Deflation in weird places...other things through the roof.  Look at Platinum...I am going to keep buying all the way down.  Looks like a deal at $830 an oz.

Tue, 01/12/2016 - 16:31 | 7036412 Squid Viscous
Squid Viscous's picture

when it says "organic" they can charge you whatever the fuck they want... duh

Tue, 01/12/2016 - 16:35 | 7036433 Takeaction2
Takeaction2's picture

Ahhh...no...it is called REAL food.  Your $1 burger will cost you in those cancer bills.

Tue, 01/12/2016 - 16:35 | 7036439 RadioFlyer
RadioFlyer's picture

and they don't have to tell you it was processed in China.

Tue, 01/12/2016 - 16:31 | 7036413 Uchtdorf
Uchtdorf's picture

San Antonio has gasoline as low as $1.59/gallon now.

Tue, 01/12/2016 - 16:35 | 7036431 38BWD22
38BWD22's picture

 

 

Given a reasonably longer time frame...  It DOES appear to be a bargain at such a large discount to gold.

Also, Nick Barisheff in his book $10,000 Gold, wrote that platinum is a leading indicator of prices.  Higher Pt prices typically correlate with coming inflation.  Lower prices of Pt signal DEFLATION.  

Pt down a lot?  Ruh-Roh.

"Platinum is for optimists."

But, I own it (average cost a lot higher than the $840 or so now).  As the world economy recovers (we hope), Pt should do very well in the coming years.

Tue, 01/12/2016 - 17:26 | 7036845 Midas
Midas's picture

I am holding off on buying platinum because I expect demand to sink further when the huge "Ron Jeremy type" channel stuffing in the auto world comes to its conclusion.

Tue, 01/12/2016 - 16:31 | 7036405 Dr. Engali
Dr. Engali's picture

Just sink a fewships  to the bottom of the ocean and create a shortage. See..., problem....., solution. Nothing a little Keynesian policy can't fix,

 

I'm Paul Krugman and I approved this message.

Tue, 01/12/2016 - 16:39 | 7036460 Soul Glow
Soul Glow's picture

I remember when I was Paul Krugman.  Those were the days.

Tue, 01/12/2016 - 16:51 | 7036477 Dr. Engali
Dr. Engali's picture

I remember those days too. I liked that Paul Krugman. I seem to remember a Mr. .... er, what's his name Jimi Hendrix? 

Tue, 01/12/2016 - 17:14 | 7036705 38BWD22
38BWD22's picture

 

 

Yah!  I remember that guy too!  Those guys!  :)

Tue, 01/12/2016 - 16:29 | 7036406 stant
stant's picture

Gota ramp stawks up for the mackdaddy speech

Tue, 01/12/2016 - 16:43 | 7036486 Consuelo
Consuelo's picture

That's the 'Long-Legged' Mac Daddy to you, son...

 

 

Tue, 01/12/2016 - 16:31 | 7036415 wmbz
wmbz's picture

"Chinese shipbuilders won’t be able to revive even if you try breathing some life into them."

So just sink a shit load of ships and create wonderful new fishing reefs. Then build new ships.

That sounds like a plan that would work....Right?

You know it wouldn't suprise me if someone would think that's a great idea.

FUBAR

Tue, 01/12/2016 - 16:35 | 7036440 Soul Glow
Soul Glow's picture

Print moar shipyards!!!

Tue, 01/12/2016 - 16:40 | 7036463 rwe2late
rwe2late's picture

All global shipping has ceased

http://www.marketoracle.co.uk/Article53636.html

 

Tue, 01/12/2016 - 17:16 | 7036734 Nasquak
Nasquak's picture

This was already debunked yesterday in the comments section of the article related to this on ZH. Somebody didn't know how AIS software works, they couldn't see any ships far away from land (duh, because it's AIS and not S-AIS) and they thought they had a cool story on their hands. They got all excited and forgot to fact check. 

However, global shipping is not in a good way right now. No arguement there. 

Tue, 01/12/2016 - 18:58 | 7037399 rwe2late
rwe2late's picture

 thanks for the update/correction

Tue, 01/12/2016 - 16:51 | 7036528 Insurrexion
Insurrexion's picture

 

Keep an eye on the container shipping...

 

Harper Petersen Index -- Topped out at 1402 in 2008. Bottomed on the first down wave (1/2009) = 275; maxed at 901 in 2011.

It never recovered. Today it is at 363 and dropping with Baltic Dry Index.

 

http://www.harperpetersen.com/harpex/harpexRH.do?timePeriod=Years10&&dat...

Tue, 01/12/2016 - 17:01 | 7036589 assistedliving
assistedliving's picture

Ins is correct.  anything 4,250 teu and up is hitting at/near alltime lows

Tue, 01/12/2016 - 21:46 | 7038086 83_vf_1100_c
83_vf_1100_c's picture

  Thx for the link, bookmarked. I see shipping do a hard dip in 2008, 2011 and again now. Hmm, almost like China's economy is somehow tied to the USSA? At least the whole world will be in the shitter together.

Tue, 01/12/2016 - 17:02 | 7036596 falak pema
falak pema's picture

The chinese have found a new promising niche :

Making DRONES... WOrld #1.

Just like smart phones...

Watch out; China could be top dog in the AI revolution.

Tue, 01/12/2016 - 18:36 | 7037300 roadhazard
roadhazard's picture

 China has to wait on American innovation to be top dog. If they can't hack it they can't do it.

Wed, 01/13/2016 - 03:03 | 7039062 Max Steel
Max Steel's picture

well whatever helps you sleep hazard. Your ignorance is laughable.

Wed, 01/13/2016 - 12:15 | 7040354 roadhazard
roadhazard's picture

My 70 years of ignorance has gotten me to a postiion that would make you green with envy. You need to get off your computer and try and catch up, son.

Tue, 01/12/2016 - 17:26 | 7036847 JohnGaltsChild
JohnGaltsChild's picture

and now....for my next trick.....

Do NOT follow this link or you will be banned from the site!