In the United States the decline in industrial production is slowing, as is the fall in GDP. China’s GDP growth topped seven percent for the first half of 2009. Commodity prices are moving upward. Is this a false horizon or is a breakbulk breakout coming soon?By George Lauriat, AJOTIs there a breakbulk breakout coming soon? There are some early indications that the conditions are to induce an upward swing in the near future are moving in to place. In the US, the decline in industrial production is slowing, and housing prices on new homes are again rising. The industrial production is a key indicator to the health of both bulk and container shipping as it represents the economic segment that moves commodities. Another favorable indicator is that China’s GDP for the first half of 2009 topped seven percent. China’s demand for iron and steel related commodities is critical to the recovery of the bulk sector as a whole. Offsetting these positive indicators is a host of economic issues, any one of which could easily kill a rally before it starts. Is the financial crisis really over? Will China’s stimulus package help anyone but China? Will the US stimulus package backfire? Will Europe and Japan contribute to the solution or sit back and wait for a windfall from the US and Chinese economic packages? Finally, what of the world’s developing nations: Where do they fit in global economic recovery? US INDUSTRIAL ACTIVITY According to the Federal Reserve’s statistical release of July 15th, industrial activity in June continued its downtrend albeit at an unexpectedly slower clip. Overall industrial production in June fell 0.4%, following a 1.2% drop in May. The recent reason for cautious optimism among economists is the June decline is not as harsh as the original forecast of a 0.7% decrease. In particular, the manufacturing sector dropped only 0.6% after dropping 1.1% in May. Considering vehicles & parts are included under manufacturing, the decline was better than expected. Motor vehicles & parts decreased by 8.2% in May and fell by only 2.6% in June. Other major non-manufacturing sectors also outperformed expectations as utilities added 0.8%, while mining output declined 0.5%. Somewhat mitigating the Federal Reserve’s industrial production news was the GDP release (July 31st) by the BEA (Bureau of Economic Analysis). According to the BEA, real gross domestic product (the output of goods and services produced by labor) fell at an annual rate of one percent (compared to 1st quarter). Although the one per cent decrease compares favorably to the 1st quarter GDP decrease of 6.4%, economists and share market analysts were hoping for the first signs of growth. For shipping the news is good, as industrial production is a major contributor to ocean freight movements. The early indications are that ores, steel & steel related products, and agricultural commodities are recovering ahead of consumer goods. These commodities could provide a needed lift for the bulk and breakbulk shipping. Despite the relative good news, it’s still unclear whether the US stimulus package(s) has taken hold or whether capital markets are ready to support the manufacturing sector. Recently, the AWEA (American Wind Energy Association) in a webcast review of the 2nd quarter remarked that financial institutions have to show the necessary support for the industry to get many planned projects moving. This problem is not isolated to wind power but is pervasive throughout the entire heavy industry sector. CHINA GDP AND THE BULK TRADES Among the other indicators supporting the hopes of a bottoming out of the recession was the National Bureau of Statistics (NBS) July announcement that China’s first half GDP (gross domestic product) grew 7.1%, Yuan 13.99 trillion (US$2.06 trillion) compared to last year. According to the NBS the Chinese economy grew 7.9% year-on-year in the second quarter, and has encouraged economists to believe that the PRC (People’s Republic of China) will hit its 2009 target o