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A short while ago we speculated on what would happen when China suspended certain projects and ceased normal industrial uses of metals, specifically copper and iron ore, when it began its aggressive campaign to "clean the air for the summer olympics". Well, now we know.

China did in fact decide to stop buying more metals and use up the stockpile in the few remaining mandatory construction jobs. They also decided to unclog the ports and force the prices of bulk shipping and metals down.

And it certainly has worked over the past two weeks. The Baltic dry is down from its all time high of somewhere under 12k and metals prices have retreated.

The only fly in Chinas ointment is that they only have 4to5 weeks of inventory before they have to start re ordering. And its a pretty safe guess imo that the rates and prices jump right back to where they were in no time flat since the demand isnt gone, just being managed. And to add to the mix throw in increased chatter of speculative acquisitions by RIO (Vale) and the Chinese govt themselves, and you ve got PCU threatening to either do a huge acquisition or try to protect themselves by diluting their shares.

In any case, PCU is ripe to grow or be acquired and be worth a heck of a lot more next year than this year. And its a pretty good bet as well that those capesize tankers will be charging outsized rates again in the not to distant future.

rxx
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