Trouble in Steel Town as Pittsburgh to Asia
Face Global Glut - (www.bloomberg.com) Steelmakers
worldwide are grappling with the consequences of China’s slowdown, which has
spurred mills in the top producer to boost overseas sales as local demand
growth stalls for the first time in a generation. That’s boosted competition
from Asia to the U.S. and South Africa, and helped to trigger lower prices. The
global industry is reeling under the impact of exports from China, according to
Sajjan Jindal, chairman of JSW Steel Ltd., India’s third-largest producer. “Steelmakers
in China have little alternative except to export and that’s having an impact
on margins for regional exporters and the Japanese mills,” said Daniel Kang, an
analyst at JPMorgan Chase & Co in Hong Kong. “Chinese exports are crowding
out other regional suppliers from South Korea and Japan, particularly in
markets like Southeast Asia.”
Shanghai
Containerized Freight Index Plunges to New Low - (www.wolfstreet.com) One of the indicators that show that things are
not all that rosy in China, or in the global economy, is the price
carriers charge to ship containers from China to its big trading partners
around the globe. Those prices have totally collapsed. Two factors are at work:
Languishing demand for Chinese manufactured goods around the world; and a
growing oversupply of ships to transport these containers (given the
languishing demand), which has turned into a price war, with the largest
carriers hoping to push the smaller ones out of business. The rates for
shipping containers from China to the rest of the world have been in trouble
since February. “Trouble” is a euphemism. They have relentlessly plunged on a
weekly basis with only some upticks in between. The Shanghai Containerized Freight Index (SCFI), a measure that tracks spot rates
(not contractual rates) of shipping containers from Shanghai to 15 major
destinations around the world, is volatile. But the trend since February has
been a pure rout. And for last week, the SCFI plunged 7.4% to a new record low.
Liquidity
freeze at China metals exchange highlights fragility in financial sector - (www.ft.com) Chinese
banks risk becoming entangled in the fallout from a liquidity freeze at an
exchange for rare metals that has also been providing high interest rate
investment products through bank branches across the country. Against a
backdrop of renewed turmoil in the Chinese equity markets, there have been protests in the past two
weeks in both Kunming and Shanghai as investors in the financial products sold
by the Fanya Metal Exchange demand their money back. It emerges that some have
already started taking their protests to the banks that distributed the
products. Fanya is a forum for trading minor metals like indium and bismuth
that has also functioned as a shadow banking conduit
— not only leveraging metal deposited with the exchange as collateral for
loans, but offering high interest investment products to retail investors. The
exchange, which is based in Kunming, stopped disbursing funds this month to
depositors. About $6.4bn in investments is frozen, according to estimates by
Chinese media.
Corn
Crashes, Other Commodities Brutalized – (www.wolfstreet.com) Corn
plunged another 4.66% today, with September futures hitting $3.73 per
bushel, after having already plunged nearly 7% last week. Corn has gotten
massacred. Since July 14, it has dropped 15%. This chart shows its powerful but
ephemeral breakout attempt that started in late June and collapsed on July 14. But
it’s not like corn has been in a bubble recently. Corn farmers have been
lamenting the crummy price they’ve been getting for their product for a
while. In July 2012, corn soared to $8.25 a bushel. Whatever that was – a
bubble or a reasonable price – it made everyone smile, from the bankers that
were financing farmland to the smallest growers. But the fun didn’t last long. This
weekly chart going back to April 2012 shows the implosion of the price of corn,
and the failed mini-breakout recently, circled in red because it’s barely
visible. A horrendous ride down for US corn growers:
Lew Warns That Puerto Rico Crisis Could Get
Costly for U.S. - (www.bloomberg.com) U.S.
Treasury Secretary Jacob J. Lew said a failure by Congress to help Puerto Rico
resolve its debts may hit the retirement portfolios of average Americans, as he
stepped up his call for lawmakers to help the island. Lew endorsed legislation
granting the commonwealth access to an orderly bankruptcy regime that’s needed
to prevent a chaotic and protracted resolution of Puerto Rico’s financial
troubles, an event he said would be costly both for the island and the U.S. “The
continued deterioration of Puerto Rico’s economic and financial conditions has
the potential to further harm retiree investment portfolios across the
country,” Lew said in a letter to Republican Senator Orrin Hatch released
Tuesday. “A significant portion of Puerto Rico’s debt is still held directly by
individual retail investors or indirectly through the municipal bond funds they
own.”
China’s Currency Policy Sinks Into Disarray Amid Rout in Stocks - (www.bloomberg.com)
China protests over Fanya liquidity freeze could spread to banks - (www.ft.com)
Tsipras Says Greece Won ‘Crucial’ Commitment for Debt Relief - (www.bloomberg.com)
Russia Ends Foreign Currency Purchases in Boost for Easing - (www.bloomberg.com)
Chinese Stocks Fluctuate Amid Signs of Exodus of Small Investors - (www.bloomberg.com)
Denials fly in war of nerves over Greek debt talks - (www.reuters.com)
Alarm Bell Rings in Tokyo at Rapid Rise in German Exports to China - (www.bloomberg.com)
Russian Banks Turn to Hong Kong for Cash - (www.bloomberg.com)
No comments:
Post a Comment