posted Mar 28, 2004 at 02:37PM
Let me quote from Mauldin's latest commentary,
"Early this month, a report hit my desk pointing out the huge problems in shipping being created by the hunger of China for materials to build its growth. At Beilun port near Shanghai, one of China's major iron ore import terminals, ships must wait for up to a month to berth and offload. China is expected to import 180 million tons of iron ore this year, up about 21% from last year. They need it for its steel, construction and auto industries.
But it is not just in China that long shipping lines are developing. At ports in India, ships must wait for as long as 30 days to pick up iron ore on the way to China. In the Reuters report, industry experts estimate that as much as 25% of the world's bulk shipping capacity is now tied up in port waiting lines.
This can be expensive, as leases on these ships run $100,000 per day. This bottleneck in shipping is making already high prices for commodities, grains and soybeans even worse. According to a Cazenove report, last year China accounted for 70% of the global increase in seaborne dry bulk trade.
Container freight rates rose about 30% last year and are expected to rise another 10% this year. The Baltic Dry Index, a benchmark for freight rates of dry cargoes such as ores and grains, jumped more than 170% last year.
Want to build some ships to take off the strain? It will be 2008 before you can get delivery and forget about a firm quote, as who knows what the price of steel and energy will be?"
All in all a good stock to keep track of...but I certainly would wait for some kind of formal buy signal on the dailies