Teck Resources (NYSE:TCK), Bucyrus International, Inc. (Nasdaq:BUCY) and Freeport-McMoRan Copper & Gold,(NYSE:FCX) all made nice upward moves Monday as China's production increased more than expected,
Industrial production grew 13.9 percent in August, beating average estimates of 13 percent from Bloomberg analysts.
China has been interesting because they seem to be sending different signals as time goes on, with a signal they're going to slow hammering the markets, and data showing growth, of course, doing the opposite.
There is no doubt China has been cutting back in urban infrastructure and property, but they've said they're looking at now expanding projects to rural areas, which they may have possibly already started to do.
Every time the underlying weakness of the global economy is exposed, data will be released which seems to contradict, or at minimum, confuse the situation.
It's dubious as to the growth in industrial production in China, but even if it's true, it does nothing to change the underlying weak fundamentals that haven't changed in any way.
Every time an alleged positive report or number comes out, the mainstream media pounces on it in order to give the appearance of a recovering economy in hopes of boosting the chances of the Democrats in the November elections in the U.S.
So we'll see this cat and mouse game go on until the elections, and whatever the outcome, the truth about the real weakness of the economy will continue to reveal itself.
For diverse mining companies like Teck, Freeport and Bucyrus, they'll continue to run the financial and economic data roller coaster until then.
Showing posts with label China Infrastructure. Show all posts
Showing posts with label China Infrastructure. Show all posts
Tuesday, September 14, 2010
Thursday, February 11, 2010
Marc Faber on China Commodities
China Commodities
Marc Faber of the famous or infamous “Gloom, Boom & Doom Report" says the demand for commodities in China will decrease significantly in 2010 as the construction boom largely fueled by the Chinese stimulus isn't sustainable.
Chinese authorities concur with this with some raw materials, stating copper imports for 2010 should return to 2008 levels after so much construction was initiated but which has largely resulted in a ton of empty buildings all over China.
Two commodities where this probably won't be true will be with iron ore and molybdenum, which are used in steel, which looks like it will be in high demand in China for the next year at least.
This is because a lot of the steel will eventually be exported and isn't reliant upon the domestic Chinese market to sustain demand.
But for commodities related to domestic Chinese construction I believe Faber is right, and investors will need to take that into consideration for 2010.
China Commodities
Marc Faber of the famous or infamous “Gloom, Boom & Doom Report" says the demand for commodities in China will decrease significantly in 2010 as the construction boom largely fueled by the Chinese stimulus isn't sustainable.
Chinese authorities concur with this with some raw materials, stating copper imports for 2010 should return to 2008 levels after so much construction was initiated but which has largely resulted in a ton of empty buildings all over China.
Two commodities where this probably won't be true will be with iron ore and molybdenum, which are used in steel, which looks like it will be in high demand in China for the next year at least.
This is because a lot of the steel will eventually be exported and isn't reliant upon the domestic Chinese market to sustain demand.
But for commodities related to domestic Chinese construction I believe Faber is right, and investors will need to take that into consideration for 2010.
China Commodities
China Copper Imports Plunging
China Copper
According to the largest metal-trading company in China, Minmetals Nonferrous Metals Co., Chinese imports of copper in 2010 could be half of what they were in 2009, setting up a potential plunge in copper prices if that assessment is true.
The Chinese are winding down the spending on infrastructure from the stimulus money, and also tightening up their credit somewhat to cool down growth.
Estimates are refined copper imports may stand at about 1.5 million metric tons for 2010, a 53 percent decrease for 2009. That is more the norm on real demand, as it's close to the 2008 numbers of 1.46 million tons of refined copper imported.
In the Chinese markets copper is mostly in a contango where buyers can get it cheaper right now than they can in the intermediate term.
Another reason for cutting back on copper imports by China is they stockpiled far more than they needed last year, and numerous empty buildings built from the artificial stimulus are largely empty and standing there with no immediate use, making more building in that sector largely irrelevant and not fueled by market forces.
China Copper
According to the largest metal-trading company in China, Minmetals Nonferrous Metals Co., Chinese imports of copper in 2010 could be half of what they were in 2009, setting up a potential plunge in copper prices if that assessment is true.
The Chinese are winding down the spending on infrastructure from the stimulus money, and also tightening up their credit somewhat to cool down growth.
Estimates are refined copper imports may stand at about 1.5 million metric tons for 2010, a 53 percent decrease for 2009. That is more the norm on real demand, as it's close to the 2008 numbers of 1.46 million tons of refined copper imported.
In the Chinese markets copper is mostly in a contango where buyers can get it cheaper right now than they can in the intermediate term.
Another reason for cutting back on copper imports by China is they stockpiled far more than they needed last year, and numerous empty buildings built from the artificial stimulus are largely empty and standing there with no immediate use, making more building in that sector largely irrelevant and not fueled by market forces.
China Copper
Wednesday, February 3, 2010
China and Iron Ore Prices
China Iron Ore
Iron Ore demand has scuttled China's attempt to pressure prices down for the raw material as they've come back to the negotiating table with major companies like BHP Billiton (NYSE:BHP) and Rio Tinto (NYSE:RTP) in order to attempt to make the type of deal which eluded them in 2009.
Last year China ended up paying more on the spot market than they would have if they had negotiated a contract, something they may try to avoid this year, although resumed talks are expected to be tough.
As mentioned, the key element undermining the Chinese strategy is demand for steel domestically, which is pushing iron ore prices up. Over the last year prices for iron ore have soared to almost twice what they were, rising to over $120 a metric ton on the spot market.
The other factor is the Chinese steel industry remains fragmented, which gives it less bargaining power at a time demand forces them to buy.
Steel production could rise as high as 640 million metric tons in China this year, in contrast to the 570 million metric tons of steel produced in 2009; about half of all steel in the world.
china chose to release stimulus money for infrastructure projects in the ongoing recession, and that of course has generated the demand for steel and iron ore we've been talking about.
There's no way out of it, the fragmented Chinese steel industry and the ongoing demand for steel will force China to pay a much higher price for iron ore than they want to, profiting Rio Tinto, BHP Billiton (NYSE:BHP) and Vale SA of Brazil.
Another clear beneficiary of the situation will be iron ore producer Cliffs Natural Resources (NYSE:CLF).
China Iron Ore Demand
Iron Ore demand has scuttled China's attempt to pressure prices down for the raw material as they've come back to the negotiating table with major companies like BHP Billiton (NYSE:BHP) and Rio Tinto (NYSE:RTP) in order to attempt to make the type of deal which eluded them in 2009.
Last year China ended up paying more on the spot market than they would have if they had negotiated a contract, something they may try to avoid this year, although resumed talks are expected to be tough.
As mentioned, the key element undermining the Chinese strategy is demand for steel domestically, which is pushing iron ore prices up. Over the last year prices for iron ore have soared to almost twice what they were, rising to over $120 a metric ton on the spot market.
The other factor is the Chinese steel industry remains fragmented, which gives it less bargaining power at a time demand forces them to buy.
Steel production could rise as high as 640 million metric tons in China this year, in contrast to the 570 million metric tons of steel produced in 2009; about half of all steel in the world.
china chose to release stimulus money for infrastructure projects in the ongoing recession, and that of course has generated the demand for steel and iron ore we've been talking about.
There's no way out of it, the fragmented Chinese steel industry and the ongoing demand for steel will force China to pay a much higher price for iron ore than they want to, profiting Rio Tinto, BHP Billiton (NYSE:BHP) and Vale SA of Brazil.
Another clear beneficiary of the situation will be iron ore producer Cliffs Natural Resources (NYSE:CLF).
China Iron Ore Demand
Friday, December 18, 2009
Global Copper Demand Overcomes Supply
Commodities Copper Supply and Demand
It's thought that once the economic recovery from emerging markets kicks into gear, copper demand will skyrocket and copper producers will struggle to supply that demand.
Already copper price projections for 2010 have been changed several times and now stand above $3.00. Copper shortages are expected to increase in 2011 as well, with demand continuing to surge.
What could cause some temporary price fluctuations downward is the huge copper stockpiles of China. But they will eventually work through all that and demand will be strong again.
Long term though, copper prices should go up for a number of years based on infrastructure and recovering building projects sure to start big time again.
Commodities Copper Supply and Demand
It's thought that once the economic recovery from emerging markets kicks into gear, copper demand will skyrocket and copper producers will struggle to supply that demand.
Already copper price projections for 2010 have been changed several times and now stand above $3.00. Copper shortages are expected to increase in 2011 as well, with demand continuing to surge.
What could cause some temporary price fluctuations downward is the huge copper stockpiles of China. But they will eventually work through all that and demand will be strong again.
Long term though, copper prices should go up for a number of years based on infrastructure and recovering building projects sure to start big time again.
Commodities Copper Supply and Demand
Wednesday, November 19, 2008
Commodities: Jim Rogers TV - Future and China
Talking on China: commodities, stocks, investment, stimulus - infrastructure key at this time
Part One, Part Two, Part Three, Part Four
Even though growth in China has slowed from its recent heady days, demand for natural resources will continue to push commodity prices higher over the long term.
Part One, Part Two, Part Three, Part Four
Even though growth in China has slowed from its recent heady days, demand for natural resources will continue to push commodity prices higher over the long term.
Friday, November 14, 2008
Commodity: China's Stimulus Plan and U.S. Dollar
What will be the effect of China stimulus plan on U.S. dollar as commodity?
A number of analysts have commented on the large number of factories that have closed in China, and think this will have such a negative impact on the country that it will lead to a depression there.
With that in mind, let's look at the recent announcement they're going to offer a stimulus package worth about $585 billion.
The reason the stimulus package of China is important to the U.S. dollar is money which would in the recent past been invested in the greenback through buying up U.S. treasuries, will now be put aside for Chinese domestic infrastructure projects.
China has been behind the available money for the U.S consumer to continue indulging in their reckless spending, that will start to change as China spreads its risk out more through now focusing on building up its domestic economy. The idea is to decouple from the export reliance it has had in order to put its people to work in factories and build up national wealth.
Now that it is accomplished, they will now change that overall strategy to focus within. They are also employing a similar strategy in Brazil, as they recently received permission for the Bank of China to have a direct presence in the country in order to offer financing for Chinese businesses who want to work of Brazilian infrastructure projects.
As this begins to play itself over the next two years (the Chinese stimulus time frame), it should put downward pressure on the U.S. dollar. Couple that with having to pay back the outrageous and ignorant stimulus package in the U.S., and we'll see heightened inflation and a weaker dollar going ahead.
Add all that to the current deleveraging of American funds at this time which has helped strengthen the U.S. dollar, and we could see a tremendous plunge in its value. It's a matter of when, not if.
A major question is whether the U.S. dollar will remain the denominated currency for commodities.
A number of analysts have commented on the large number of factories that have closed in China, and think this will have such a negative impact on the country that it will lead to a depression there.
With that in mind, let's look at the recent announcement they're going to offer a stimulus package worth about $585 billion.
The reason the stimulus package of China is important to the U.S. dollar is money which would in the recent past been invested in the greenback through buying up U.S. treasuries, will now be put aside for Chinese domestic infrastructure projects.
China has been behind the available money for the U.S consumer to continue indulging in their reckless spending, that will start to change as China spreads its risk out more through now focusing on building up its domestic economy. The idea is to decouple from the export reliance it has had in order to put its people to work in factories and build up national wealth.
Now that it is accomplished, they will now change that overall strategy to focus within. They are also employing a similar strategy in Brazil, as they recently received permission for the Bank of China to have a direct presence in the country in order to offer financing for Chinese businesses who want to work of Brazilian infrastructure projects.
As this begins to play itself over the next two years (the Chinese stimulus time frame), it should put downward pressure on the U.S. dollar. Couple that with having to pay back the outrageous and ignorant stimulus package in the U.S., and we'll see heightened inflation and a weaker dollar going ahead.
Add all that to the current deleveraging of American funds at this time which has helped strengthen the U.S. dollar, and we could see a tremendous plunge in its value. It's a matter of when, not if.
A major question is whether the U.S. dollar will remain the denominated currency for commodities.
Monday, November 10, 2008
China to Offer Stimulus Package of $585 Billion over Next Two Years
While China will continue to grow at a rate enviable by most other nations, it has decided to offer their own version of a stimulus package in their own country worth over $585 billion.
China's growth is estimated to be at about 8.5 percent next year, down by 3 percent from last year.
Most of the package will target ten key areas in the country, and will focus on "transportation, rural infrastructure, low-income housing, electricity and water. Some of the funds will also be used to build up areas ravaged from natural disasters, particularly the May earthquake in the Sichuan province."
This is being done in an effort to strengthen the domestic market, as the country has primarily relied on exports for the majority of their past growth. That is what is slowing down, so they're going to prop things up until exports start to perform strongly again, which could take a couple years.
In an effort to generate more liquidity in the markets, China is also removing commercial bank ceilings in order to loosen up credit for rurul areas, technological innovation, small business and industrial mergers and acquisitions.
Another area they're targeting is their value-added tax, which will dramatically cut back on business costs to the tune of about $17.5 billion.
China's growth is estimated to be at about 8.5 percent next year, down by 3 percent from last year.
Most of the package will target ten key areas in the country, and will focus on "transportation, rural infrastructure, low-income housing, electricity and water. Some of the funds will also be used to build up areas ravaged from natural disasters, particularly the May earthquake in the Sichuan province."
This is being done in an effort to strengthen the domestic market, as the country has primarily relied on exports for the majority of their past growth. That is what is slowing down, so they're going to prop things up until exports start to perform strongly again, which could take a couple years.
In an effort to generate more liquidity in the markets, China is also removing commercial bank ceilings in order to loosen up credit for rurul areas, technological innovation, small business and industrial mergers and acquisitions.
Another area they're targeting is their value-added tax, which will dramatically cut back on business costs to the tune of about $17.5 billion.
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