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Why China’s auto sales are the weakest in 19 months
The narrowing automobile sales in China have a significant impact on the shipping industry. They also affect oil demand.
For the week ending October 3, 2014, Canadian crude oil exports to the U.S. stood at 3.25 million barrels per day (or bpd).
For the week ending October 3, 2014, total products supplied were 19 million barrels per day (or bpd)—compared to 18.6 million bpd in the first week of September.
Historically, the U.S. has been the largest oil importer. However, U.S. production is surging due to a combination of horizontal drilling and hydraulic fracturing.
Managers use the oil tanker orderbook as a yardstick to assess the industry’s future fundamental outlook. It includes the number of ships ordered and under construction.
Five-year VLCC prices were consistent at $75 million—from the previous month. Ten-year VLCC prices were unchanged at $48 million.
Unlike shipping rates in the spot market, newbuild prices are less volatile. They aren’t subject to seasonality. Newbuild prices and shipping rates have mainly followed each other in the past.
Analysts and money managers follow the Baltic Dirty Tanker Index to assess the crude oil shipping industry’s revenue and earnings potential.
U.S. imports are an important indicator. U.S. imports have been changing the entire industry’s dynamics. They’ve become a crude oil net exporter.
Shipping is impacted by global economic growth. It will see lower demand in the coming years than what was previously expected.
RS Plato expects a small rebound in Chinese coal imports in 2015 and 2016. However, if China reduces coal consumption growth more, there will be downside risks.
The Baltic Dry Index measures the health of the dry bulk industry. The Index increased 8.6% through October 3—compared to last year.
Second-hand vessel values were led by quicker deliveries. Price movements in second-hand vessels tend to reflect industry participants’ expectations for medium-term fundamentals.
Ship prices can be broken into newbuilds and second-hand vessels. Newbuilds reflect an expectation of future rates. Second-hand vessels show near-term fundamentals.
The number of ships on order is a measure that reflects managers’ expectations of future supply and demand differences. Rising ship orders usually indicate that shipping rates will rise.
China’s power consumption in August was 502.5 billion kilowatt hours (or kWh). This was a decline of 1.5% from the levels last year.
China’s real estate sector is a key component of the country’s economic activity. It accounts for ~20% of its gross domestic product (GDP).
Shipments from Brazil are a key metric for investors to watch. Higher export volumes have a positive impact on shipping rates. Shipping rates are a critical variable.
The Hedland Port is one of the major iron ore exporting ports in the world. It represents about one-fifth of the global seaborne iron ore trade.
China’s official manufacturing Purchasing Managers Index (or PMI) for September didn’t change from August. The PMI was modest at 51.1.