Tuesday, February 18, 2014

ZH: "Chinese Iron Ore Stockpiles Rise To Record As End Demand Plummets"

Chinese Iron Ore Stockpiles Rise To Record As End Demand Plummets


Stagflationary Mark said...

Top 5 Reasons to Hoard Ore at These Prices

1. The earth just isn't making more ore.
2. Buy ore now or forever be priced out.
3. Everyone needs a mine to call home.
4. ZIRP!
5. Hyperinflation!

Hahaha! Sigh.

Gallows humor.

Anonymous said...

China has mostly low-grade iron ore. The FT did a good report as to why less would be exported from China and also why demand would diminish within China. I took a look at short candidates but found that many foreign investors were publicly making IOIs to acquire targets in this category a while ago. This may have changed. But, in generally, private equity funds still have too much cash (thanks to the credit bubble) and are making long-term investments in cyclical industries that are near or at bottom.

Anonymous said...

All of the shipping segments serve as a case study on this trend: www.bloomberg.com/news/2014-02-18/private-equity-funds-bet-5-billion-on-shipping-rebound-freight.html .

Some better short candidates are overpriced micro-caps in less cyclical, defensive industries that are at all time highs, such as bio-pharama.

Here is why: http://www.ft.com/intl/cms/s/0/27482366-9032-11e3-a776-00144feab7de.html.

When lockups are no longer included in IPOs, it's pretty much a given that the firework show will end.

Write small calls and buy long puts of many fireworks as they reach the finale and you will make a killing.

Anonymous said...

Dry bulk shippers with an upcoming catalyst are good shorts. (GNK)

CP said...

It's true that PE and hedge funds are interested in shipping - acquiring these ships at the "bottom" of the market.

But they're doing it by buying the senior debt and foreclosing. General Maritime and now probably Genco.

That is the point of that Bloomberg article.

Anonymous said...

The main point of the bloomberg article is that banks are selling shipping loan portfolios because the market is willing to pay a premium for the risk.

Some sophisticated investors may want to restructure and streamline the consolidation, but others are also investing in JVs and in equity (e.g. Avenue Capital in the MLP) as reported.

It seems that most are simply picking up low-priced bonds at the low end of the cycle knowing that they can either sell to distressed or to people with a longer-term horizon.

Anonymous said...

We don't care about any dry bulk shippers except GNK. No one is investing in GNK equity.

P.S. It's not the low end of the dry bulk cycle.