China, Baltic Dry and the V-Shaped Recovery

“What was a V-shaped recovery now seems to be experiencing a little gravitational pull.” -Stephen Green, Standard Charted Bank in Shanghai

FN: The sneaking suspicion out there is that China has pretty much completed their commodity re-stocking. The Baltic Dry Index (BDI) has been down nine of the last ten trading days and has now breached the rising trendline from the December 2008 low of 663. The price is now also below the 20, 50 and 200 day EMAs (blue, red and green lines).

In the post Baltic Dry, Chinese Hoarding, Commodities and the Fake Recovery I highlighted:

"As the global economy continues to falter and Chinese exports plummet, there is growing concern that the stockpiling may soon come to a halt, leading to further, painful drops in commodity prices."

Asian Stocks Drop as Weaker Earnings Fuel Valuation Concerns: "Asian stocks fell for the first time in three days and Chinese shares entered a so-called correction, amid concern a rally in equities had outpaced earnings prospects.

China May Delay Tightening as Exports, New Loans Drop (Update1): "The People’s Bank of China may delay tightening monetary policy until the fourth quarter after exports dropped in July, lending declined and investment growth slowed, economists said.

Exports fell 23 percent from a year earlier, the government said yesterday. Urban fixed-asset investment rose a less-than- estimated 32.9 percent in the first seven months from a year earlier. New loans plunged to 355.9 billion yuan ($52 billion), less than a quarter of advances in June.

China’s economy, which avoided following the U.S. and Europe into recession, is yet to cement a recovery as factories have too much capacity and shipments abroad are weakening, officials said this month. The nation’s $4 trillion yuan ($585 billion) stimulus package can’t completely offset slumping export demand, the commerce ministry said in Beijing today."

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World Trade, Baltic Dry and "Green Shoots"