Addena

[solarbird]

Should've checked these:

The Baltic Dry Index has fallen to crash-of-08 levels. There's a little bit of a pick-back-up in the last couple of weeks, but that's a big decline. That's not hugely reliable because it's affected by ship supplies as well as cargo to be shipped - but even so, that's a pretty big decline. Either way, you want to see it matched by rail car loading declines, which lag a bit for obvious reasons...

...and in this case, the correlation is hazy at best. The numbers do not look awesome, but I can't honestly say it's out of cycle yet. Keep an eye on this.

Comments

[maellenkleth]

Interesting obervation about the Baltic Dry Index. Here's something else scary, related to energy supplies.

Both Platt's Coal Trader (US) and the TEX Report (Japan), which are commodity newsletters I subscribe to, are worriting about the increased role of 401(K) fund managers playing the metallurgical-coal markets. Like oil, there always was a nominal spot market, but most deals were multi-year mine-to-mill contracts, with only one intermediary: to wit, one or the other of the sogo shosha [the Japanese trading houses like Marubeni and Itochu].

Well, not any more. Now there are a bunch of players trying to get in on the volatile and presently bubbled-up spot market for hard coking coal and semi-hard coking coal in particular (those are terms of art, which may be translated as 'really frothy in the coke-oven' and 'not quite so frothy'.]

At least from the mining side, there is some concern that eventually the feeding frenzy will stop. Somebody's going to be forced to take delivery of a couple of shiploads of black rocks for which they really have no direct use, and the whole house of cards will crash.

This is, right now, exacerbated by the flooding and destruction in the coking-coal fields of Australia. If the market crashes, there are a fair number of over-leveraged marginal producers in North America who might not be able to weather a price slump.

It'll be an interesting summer. (And I promise to send postcards).

edited to add: yup, I am aware that this is unlocked. Believe me, I don't draw my paycheques under this name. ^_^

[solarbird]

Not just coal - it's all across commodities. That giant pile of money thrown in by ... a bunch of governments, but particularly the US - is blowing huge bubbles all over the place.