07-05-2020, 10:56 AM
(This post was last modified: 07-05-2020, 10:57 AM by Jean_claude_killy.)
(06-05-2020, 04:44 PM)stirred Wrote: CEO of Germany's largest shipping company (Hapag-LLoyd) just came on TV so I thought I'd listen, in case any relevance to EM.
He says they've had reduced demand out of Asia/China and then the West starting in March and India and others now. A ratings agency downgraded their outlook in April.
But their share price has gone up 500% in the last 12 months and 120% mostly since beginning of March.
The interviewer asks the CEO if he can give a reason why. The CEO says "No, I don't think so...we're trying to understand it. There is no obvious reason for it."
Bizarre.
As with everything else, shipping is governed by supply and demand; demand has dried up, storage is full and there are tankers at sea full of oil with nowhere to go.
This is from last weeks Investors Chronicle, a Financial Times publication:
Currently, almost 30 oil tankers are anchored as storage off the coast of southern California – tankers that would have originally gone out to the source of the supply chain and shipped it around the world. Stranded might be a better word, as they are full up with oil, but unable to deliver it. Refineries are flat out. Space is running out to fill the glut in oil, and this has led to the price of storage space doubling in just two months. Land storage is full, and tankers are filling up.
Last week, we saw what happened in WTI futures as the May contracts went negative. When storage runs out nobody wants to hold a physical product they can't store, and so it should come as no surprise that tanker stocks are swiftly moving through the gears.