China’s Shanghai Composite Index is testing support at 2150 and the lower trend channel. Recovery above the descending trendline would suggest another rally, while failure of support would warn of a correction to primary support at 1950. The index hints at long-term recovery but further confirmation is necessary.
The Harper Petersen Index, from ship brokers Harper Petersen & Co., indicates that shipping rates for container vessels remain depressed, suggesting a sluggish global trade in manufactured goods. Exporters like China would be severely affected.
The Baltic Dry Index — reflecting dry bulk shipping rates for commodities like iron ore and coal — jumped sharply, however, reflecting an upturn in demand for bulk commodities.
Bulk commodity prices remain depressed according to the RBA.
But export volumes are rising, in step with the Baltic Dry Index, reflecting strong demand from infrastructure development.
WSJ reports that monthly electricity consumption has reached a new high:
China on Tuesday posted an all-time record-high electricity output level of 498.7 billion kilowatt-hours in August, rising 13% from a year earlier.
Monthly fluctuations should largely be ignored because of weather variation — excessively hot months like August can boost electricity demand — but the rising long-term trend in electricity consumption (chart from IndexMundi) suggests a robust recovery. A recovery led primarily by infrastructure investment rather than manufactured exports may well prove unsustainable in the long-term, but should provide welcome relief to the resources sector in the next few years.