Industries around the world have managed to maintain production amid the Corona pandemic. In the USA, Deutsche Bank predicts an investments boom. The economic engine in China is humming, which could lead to a shortage of iron ore as raw material suppliers can no longer keep up. And it could all be going so smoothly if there weren’t still logistical challenges to solve.
USA: Investments Boom Ahead
At an average of 22 years, the capital stock of American companies is more obsolete than ever before, writes Deutsche Bank in a recent newsletter. But the U.S. is now likely to face a boom in equipment investments.
The planned $2.6 trillion government infrastructure package should indirectly drive private sector investments; at the same time, there is political support for locating manufacturing facilities domestically.
Ulrich Stephan, chief investment strategist at Deutsche Bank, believes that equipment investments will soon rise again at annual rates of over five percent, as it did most recently during the Reagan era.
The World’s Largest Iron Ore Mines Struggle to Keep Up With Strong Demand from Chinese Steel Makers
The world’s two largest iron ore mines struggled to keep up with strong Chinese demand in the first quarter of 2021 as they were hit by operational challenges and weather disruptions – a positive sign for prices, which are already at a decade high.
Iron ore prices thus continued to rise Tuesday, extending gains fueled by improved profit margins at China’s main steelmaker and disappointing production figures from major miners Rio Tinto and Vale that fueled the steelmaking commodity’s rally.
Experts now speculate that tight conditions will continue for the rest of the year, given strong global steel spreads and robust demand indicators.
While China has sought to curb emissions in the steel-producing city of Tangshan through production restrictions, demand remains robust, particularly for higher-grade iron ore.
Malaysia: Freight Rates to Stay High for Another Eight Months
Exorbitant freight rates, exacerbated by tightening container supply, are expected to remain in shippers’ finances for another eight months, the Malaysian National Shippers’ Council (MNSC) said.
Based on a survey conducted by the MNSC in February, shippers’ responses showed that freight rates have skyrocketed to historic levels of between US$6,000 and US$10,000 per container, compared with US$55 to US$300 per container before the pandemic.
“Shippers continue to face container and vessel capacity shortage issues which have led to high freight rates,” MNSC chairman Datuk Dr Ir Andy Seo Kian Haw told The Malaysian Reserve.
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