schminkie

China, Shipping and the Great Commodity Carry Trade

i like this article. it touches on parts of a situation which has been for me a puzzlement. whati want to know is what deals were cut when the pres of brazil went to peijing. a few little points...

in observing the chinese commodities purchases at bargain prices per shipping one might look at china cosco. they bought over 450 dry bulk ships last year from cosco group, their mother-ship as it were. their capacity plus underpinning of the prc gov't make it a safe bet although with caveats. they travel inland rivers, the china coast and the oceans.

drys made a bet on oil and invested in hugely expensive drilling vessels when both ship building, oil prices and drilling leases were in the 2008 stratosphere. but then things changed and that plan lost value. they are working out their debt, debt covenants, payments etc now but their debt and these decisions by management make me uncomfortable.

one of the mainstays of the chinese economy now is or at least would be producing and assembling products [using imported parts] for american companies. with that plus vast infrastructure contracts, china will be reliant on foreign economies for the foreseeable decades. therein go the commodities they are scooping up.

don't forget they are also selling or licensing extraction of commodities within china to american and other companies. also there is resistance to their buying large parts of overseas commodities companies.

if walmart starts printing money i'll worry more!

Looking for Opportunities in an Irrational Market Place

dryship has a substantial investment in ocean oil drilling rigs.

Two Water Transport Plays - Besides DryShips

excellent call on dsx. as far as slow downs... dsx's fleet is fully contracted so the 'slowdowns' are less germane. if you want, their website has a list of contracts including future contracts and a little map showing where their ships are and where they're going.

i wouldn't overplay this 'slow down'. the dry bulk business is quixotic to say the least. i've found articles in complete opposition in the same or consecutive trade periodicals. additionally i see expansion, aggressive expansion, per acquisition and exploration vis a via the coal and iron ore/steel industries.

i guess wall st and its usual suspects are looking at a different world than these global corporations; companies that feel confidant in investing 2008 capital for profits and market share years down the road. if industry is the body wall st is the tape worm.