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Sunday, October 21, 2007

Tomorrow, Sales Taxes - Today, The World

I mentioned my worries over ship lines earlier, and MC, whose commentary I value, said that they were chock up at shipyards. But over the summer, I have seen consistent indicators of pre-selling lines (very experienced owners selling out), and some of these interests were being sold at very substantial devaluations from prior sales. Normally that would occur 12-18 months before it hit generally, just as for example, a couple of big investors in retail commercial in the US unloaded in 2005/ early 2006.

Anyway, this Bloomberg article covers some of the tanker shipping problems. The theory is that the single-hulls were going to come off by being converted to bulk dry, but I don't know where the shipyard capacity is for this right now, and it seems as if some of the lines being sold in mid-Asia are dry carriers. Read the article:
The Bloomberg Tanker Index has risen 19 percent in the past two years, even as freight rates sank 38 percent. The price of marine fuel, the biggest cost for shipowners, has advanced 73 percent to a peak of $446.50 a metric ton and the number of ships available is near a record.
Falling freight rates and record fuel costs have given shipowners their longest string of losses in five years, according to Citigroup Inc., the third-largest lender to the shipping industry. So-called very large crude carriers, which transport about 2 million barrels, are losing more than $13,000 a day in the market for day-to-day charters. Shipowners are spending more on fuel and debt payments than they collect in rent.

Suezmax vessels, the biggest tankers that can navigate Egypt's Suez canal while full, are losing more than $10,000 a day. Owners of aframaxes, 600,000-barrel carriers that usually haul crude within the same continent, are losing about $13,000 a day, Citigroup estimates.
There's a lot of important stuff in here.

Nice find!

Oct. 22 (Bloomberg) -- The record increase in oil prices and the unprecedented number of new tankers transporting crude is a stock market crash waiting to happen.

Good grief. We're caught between perfect storms and crashes waiting to happen.
Well, there's considerable dissonance in pricing here. You can't have high pricing unless somewhere the money comes to pay for it.

If you look at worldwide commodities, it's time to get uneasy.
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