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Shipping supercycle

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dspp
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Shipping supercycle

#375858

Postby dspp » January 11th, 2021, 2:06 pm

Apparently this time it is different !

https://seekingalpha.com/article/439810 ... ent=link-0

- dspp

Urbandreamer
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Re: Shipping supercycle

#375874

Postby Urbandreamer » January 11th, 2021, 2:46 pm

dspp wrote:Apparently this time it is different !

https://seekingalpha.com/article/439810 ... ent=link-0

- dspp


I didn't read any claims that this time it's "different" or at least in any major way. The term cycle is often used for industries that lurch from boom to bust. There is a stockmarket "theory" known as the Elliott wave. The "theory" sees waves (a bit like sine waves) of different frequencies that overlay leading to small booms and busts part of the time and super booms and busts in, yes cycles. Hence the term supercycle.

As I understood the article, it predicts that large gains can be made in the near future due to pent up demand and short fall of supply. In the past similar arguments have been made of material mining. While the article doesn't explicitly state it, the use of the word cycle would sugest that they also forsee a rush to build supply leading in turn to oversupply and another bust. A supercycle would suggest that the boom and bust would each be of a longer duration.

There are however parts of the article that I DO seriously question.
They state that
The only ship size that operators want to buy right now is the Megamax ...

That ship is bigger than a Panamax, hence too big for that canal.
Of course the Chinese were funding a bigger canal, but it's not dug yet and may never be finished.

dspp
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Re: Shipping supercycle

#375888

Postby dspp » January 11th, 2021, 3:08 pm

Urbandreamer wrote:
dspp wrote:Apparently this time it is different !

https://seekingalpha.com/article/439810 ... ent=link-0

- dspp


I didn't read any claims that this time it's "different" or at least in any major way.


I think you may have overlooked where he says,

"This time is different for container shipping - we could see these rates go much higher and stay high for the foreseeable future."

Personally I am unsure of some of the points he is making, but did find it an interesting summary. It is certainly not a game for the fainthearted or the shallow-pocketed.

Somewhat coincidentally we are shipping UK > CN by rail this week. Or at least were supposed to be, but apparently problems clearing outbound traffic (Brexit creating a lack of agents) means that some will fly. Anyway the discussion of the rail impact was one of the things I noticed missing in what I thought was a good note.

regards, dspp

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Re: Shipping supercycle

#383880

Postby SteMiS » February 5th, 2021, 4:18 pm

dspp wrote:Apparently this time it is different !

https://seekingalpha.com/article/439810 ... ent=link-0

- dspp

I can't say I'm convinced. I used to work in an engineering business which served the shipping industry and we tracked the Baltic Index, which is a composite of the sub indices of different bulk carriers. It's a classic boom bust industry in which capacity is driven by new build and scrappage. The index has been pretty depressed for a while and the latest data - https://tradingeconomics.com/commodity/baltic - doesn't seem to show much of an upturn. Of course there are always bits of the market that, for various reasons, do better than others. The Greeks are the boys to watch. When they start buying ships then it's generally been a good sign that the market is about to turn. I'm not close enough these days to know what's going on.

As you say, interesting though...

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Re: Shipping supercycle

#385165

Postby dspp » February 9th, 2021, 5:22 pm

Shipping supercycles can of course be affected by commodity supercycles. Thanks to JohnKempReuters for this link

FROM BOOM TO BUST:
A TYPOLOGY OF REAL COMMODITY PRICES IN THE LONG RUN
David S. Jacks

ABSTRACT

This paper considers the evidence on real commodity prices from 1900 to 2015 for 40 commodities,
representing 8.72 trillion US dollars of production in 2011. In so doing, it suggests and documents
a comprehensive typology of real commodity prices, comprising long-run trends, medium-run cycles,
and short-run boom/bust episodes. The main findings can be summarized as follows: (1) real commodity
prices have been on the rise—albeit modestly—from 1950; (2) there is a pattern—in both past and
present—of commodity price cycles, entailing large and long-lived deviations from underlying trends;
(3) these commodity price cycles are themselves punctuated by boom/bust episodes which are historically
pervasive.


https://www.nber.org/system/files/worki ... w18874.pdf

- dspp

dspp
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Re: Shipping supercycle

#387247

Postby dspp » February 16th, 2021, 6:05 pm

https://www.reuters.com/article/us-glob ... SKBN2AG261
and
https://fingfx.thomsonreuters.com/gfx/c ... CYCLES.pdf
and
http://www.sfu.ca/~djacks/data/boombust/index.html

"LONDON, Feb 16 (Reuters) - Commodity markets may be about to embark on another supercycle – a multi-year, broad-based, and usually large increase in prices – according to research published by some of the top investment banks involved in the sector. But while many prices are likely to increase over the next couple of years, after slumping during the coronavirus pandemic, it is less clear this will mark the start of a supercycle rather than an ordinary cyclical upturn."

Something along the lines of '20 of the last 10 supercycles have been correctly predicted' ...........

regards, dspp

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Re: Shipping supercycle

#387288

Postby GrahamPlatt » February 16th, 2021, 8:54 pm



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