More on a potential export plunge

By Fester:

Last week, I argued that US exports were likely to cliff dive as heavy industrial capital equipment and raw materials used to make pretty much everything are no longer in high demand.  So prices and quantities demanded at much lower prices are dropping hard and fast. 

Now the international trade system is starting to freeze up as the large bulk carriers that transport the raw materials of the modernized world don't have enough business to make it worthwhile to sail.  It is cheaper for ship owners to keep their vessels in port with a skeleton crew than to carry cargo. 

Via Bloomberg and John Robb:

Capesizes that were attracting rates of $233,988 a day as recently as June are now available for $4,793, according to the Baltic Exchange in London. That's below the cost of paying for crew, insurance, maintenance and lubricants...

At least 20 percent of the vessels most commonly hired to haul coal and ore are sitting empty as steelmakers cut output and dwindling trade credit halts deliveries, ....

``There are simply no cargoes,'' Sjuve said from Oslo. ``It's primarily the steel market but it's even more difficult due to financial markets and letters of credit in particular.''    

ArcelorMittal, the world's biggest steelmaker, on Nov. 5 said its global output will decline by more than 30 percent.

No one is buying low end, raw goods, so I have doubts about people buying high value add processed goods in the intermediate term future. 

      

Comments

[Moshe]

The economy is plunging at a great speed. The exports are the major source of Income in the economy. If they are affected adversely, the economy will also suffer to a great deal.

[Moshe]

I think that exports are a really good source of income and it should not be neglected as they would affect the economy adversely and will lead to a loss.