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26 / 01 / 12 Vale Set to Bypass China Ore-Ship Ban With Transfer Vessel Vale SA, the world's largest iron- ore producer, is set to take delivery of a ship that wi.. more
19 / 01 / 12 Goldman Cuts Copper, Nickel Forecasts on Supply Prospects Goldman Sachs Group Inc. lowered forecasts for copper, nickel and zinc prices on prospects.. more
05 / 01 / 12 Iron ore price negotiations - 40% cut reported It is reported that Rio Tinto Limited and BHP Billiton Limited have reportedly agreed to a.. more
22 / 12 / 11 Iron Ore-Spot price rises as China boosts restocking Spot iron ore prices extended gains on Wednesday as more steel mills in China returned to .. more
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19 / 01 / 12 in
Goldman Cuts Copper, Nickel Forecasts on Supply Prospects
Goldman Sachs Group Inc. lowered forecasts for copper, nickel and zinc prices on prospects for increased supply of the metals.
The 12-month estimate for copper was cut to $9,000 a metric ton, the bank said in a report dated today. It projected prices of $18,600 a ton for nickel and $2,200 a ton for zinc. The forecasts in December were $9,500 a ton for copper, $21,000 a ton for nickel and $2,400 a ton for zinc. Its recommendation to buy gold in October has gained $266.80 an ounce and the copper recommendation in December is up $734 a ton.
Goldman’s new forecasts signal gains for copper, zinc, nickel and aluminum after the London Metal Exchange’s index of six industrial metals fell 22 percent last year, the biggest drop since 2008. Mined copper output growth will accelerate to 4 percent this year from 0.4 percent last year while demand for refined metal will climb 3 percent this year compared with 2.8 percent last year and 10 percent in 2010, Goldman said.
“Current prices generally present value to consumers,” Max Layton, a London-based analyst at the bank, said in the report. “We are most bullish on copper, moderately bullish on aluminum and zinc, and bearish on nickel” over six to 12 months.
Goldman Recommendations
Copper, oil and gold may lead a 15 percent rally in raw materials this year as economic growth in the U.S. and China offsets the impact of a European recession, Goldman said in a report last week. Goldman’s commodity recommendations to buy gold, brent oil, copper, zinc and U.K. natural gas since April 2011 have been profitable except for natural gas. It closed copper and zinc recommendations in December at losses and recommended investors buy them again at lower prices.
In three months, copper will be at $8,000 in three months, aluminum at $2,300, zinc at $2,050 a ton and nickel at $18,600 a ton, Goldman said. On that basis, aluminum and zinc will be higher over the period and copper and nickel lower.
Copper for delivery in three months rose 0.7 percent to $8,056.25 a ton by 11:22 a.m. on the LME. Aluminum was at $2,150 a ton, zinc was at $1,960 a ton and nickel was at $19,460 a ton.
Goldman lowered forecasts for this year’s average prices of all four metals , citing an “unexpected deterioration in demand” in 2011’s final quarter. Copper will average $8,567 a ton, against the October forecast of $9,200 a ton, and the projection for aluminum was cut to $2,321 a ton from $2,500 a ton, the report showed.
Zinc is set to average $2,104 a ton, down from $2,305 a ton previously, according to Goldman Sachs. The bank reduced its estimate for nickel to $18,650 a ton from $20,000 a ton.
Copper demand will exceed supply by 202,000 tons this year, compared with a shortage of 198,000 tons last year, according to the report.
28 / 08 / 11 in
China steps up iron ore drive in Africa
A bold push by China into iron ore projects in Africa and elsewhere will increase its access to supply and may help moderate prices but will only slowly reduce its dependence on the three companies that dominate the market.
China, the world’s largest iron ore consumer, imported 618 million tonnes of iron ore last year, and most of that was supplied by global miners BHP Billiton (BHP-N81.962.393.00%), Rio Tinto (RIO-N58.621.652.90%) and Vale (VALE-N26.930.702.67%).
About 85 per cent of the imports of the raw material to make steel came from only four countries – Australia, Brazil, India and South Africa.
Beijing has stepped up its campaign to break that dependence by investing in mining projects in places such as west Africa, where it has agreed on a spate of joint ventures and is seeking other deals, including a proposal to swallow a whole company.
These projects could produce up to nearly 250 million tonnes of ore annually in the medium to long term.
But even if China secures and fully develops all of these proposed projects, it will struggle to cut it reliance on the Big Three, analysts said.
The new projects will take many years to achieve full production, while the majors each have their own ambitious expansion projects, which will help reinforce market dominance.
“These projects have little chance of displacing production from the major producers such as Rio, Vale and BHP, who are so far ahead in terms of infrastructure, capital expenditure and quality of resources,” said John Meyer, a mining analyst at investment bank Fairfax.
The Chinese government has encouraged steelmakers such as Baoshan Iron and Steel and Wuhan Iron and Steel to gain more control over foreign iron ore. Wuhan, its third-largest, has vowed to become self-sufficient by 2015.
“China currently owns less than 10 per cent of imported iron ore. We should seek 50 pe rcent of ore from Chinese-invested overseas resources in the next five to 10 years,” Li Xinchuang, deputy secretary-general of China Iron Steel Association, told China Daily in July.
Mr. Li said China would be able to break the hold of Rio, Vale and BHP on supply and pricing only if it can source half its overseas ore from Chinese-invested mines.
“The Chinese are looking to become involved but they simply don’t own the licences to the world’s largest iron ore projects, Mr. Meyer said.
China has had a fraught but symbiotic relationship with the majors, vowing to cut its dependence on them after failing to persuade them to offer big price discounts during the global financial crisis.
The icy relationship appeared to thaw in 2009 when China’s state-owned Chinalco and Rio Tinto agreed on a $19.5-billion (U.S.) tie-up, but later that year Rio spurned the deal.
China was bitter about the break-up, but later the two agreed to a major joint venture to develop Rio’s massive Simandou iron ore project in Guinea.
Chinese industry officials have also accused the companies of monopolistic practices after Rio, Vale and BHP decided to abandon an annual pricing system in favour of a more flexible, index-based quarterly system last year.
In July, Hanlong Mining Investment bid for all of Australia’s Sundance Resources , which is developing the Mbalam iron ore project that straddles Cameroon and the Republic of Congo, in a deal worth $1.5-billion.
That and other recent deals have shown China’s determination to gain more direct control over supply and that it is eager to come in at an early stage and make the infrastructure investments needed to bring projects on stream.
“In the current state of markets, only Chinese firms can back up such huge infrastructure investments,” said Luca Del Conte, director of capital markets at GMP Europe.
Infrastructure is also a vital part of a deal between Chinese firms and African Minerals to develop its estimated 13 billion tonne Tonkolili project in Sierra Leone.
China Railways Materials Commercial Corporation invested $230-million, and in August, Shandong Iron & Steel, the world’s ninth-largest steelmaker, finalized a deal to pay $1.5-billion for a 25 per cent stake.
The deal will give Shandong the right to purchase iron ore at a discounted price under an off-take arrangement, and it retains the option to buy up to 25 per cent of annual production from each of Tonkolili’s three phases based on benchmark prices.
More deals are expected as Chinese firms look to invest in development-stage iron ore projects globally in which their expertise in infrastructure development can be used, Edison Investment research said in a note.
“This makes West Africa an ideal target; and the region is opening up as the business climate improves,” it said.
China’s own ambitious domestic infrastructure and construction projects will keep increasing its appetite for iron ore. It is forecast to import an average of 670 million tonnes of iron ore in 2011, up 8 per cent from last year.
That growing demand has fuelled a price rally, but supply from China’s own projects, when they launch production in the medium to long term, could help moderate prices along with the additional output from the majors’ own expansion plans, analysts say.
Iron ore with 62 per cent iron content has shot up by a third in about a year and has nearly doubled over the past two years. It was last quoted at $176.80 per tonne, according to the Steel Index.
Mr. Del Conte says the additional supply alone will probably not have a huge impact but could help stabilize the market.
“[China] will have access to concentrate at favorable prices for their own direct supply, and in my personal opinion it will probably make sure prices will not rise too far above $150 a tonne in the medium-term,” Mr. Del Conte said.
11 / 08 / 11 in
Nickel prices rebound on China imports, LME inventory
Nickel prices recuperated slightly after a sharp fall in the previous month. This rise in price was attributed to increase in exports to China by the Philippines' largest nickel miner, Nickel Asia Corp to 24% from a year earlier to 4.2 million wet metric tonnes, though prices got hurt in the beginning of the month due to fear of Chinese inflation figures.
Nickel stockpiles registered by the LME were the only among the base metals contracts that showed a tightening so far this year, down 21.95 percent, according to Reuters and LME data, constituting almost 10 percent of annual world consumption.
Also, Australia's no. 2 nickel miner Minara Resources halted its production after the acid plant at its ore processing facility was closed in the beginning of the month.
As per custom officials of Russia, nickel exports outside the Commonwealth of Independent States fell in the first five months of this year as compared to the previous year’s volumes. Nickel prices fell slightly in the midst of the month due to concerns of Euro zone debt and fragile demand from the stainless steel industry as stainless steel accounts for around two-thirds of nickel consumption. Moreover, much of the production was affected after Cuba's second most significant nickel plant halted in the middle of the month due to breakdown.
We believe there are expectations that demand may arrive from Asia and other regions in the near term. Additionally, the comment of European Central Bank’s President Jean-Claude further triggered positive sentiments stating that the ECB "has decided to suspend rating requirement for Portugal".
Supply disruptions along with refinery shutdowns and healthy demand outlook indicated by more than expected Chinese GDP data supported the metal during the whole month. Prices may rise further as the economic environment recuperates, due to healthy long-term market fundamentals.
Nickel prices gained momentum last month after being in control of bears for two consecutive months. The counter is trading in between trend channels for past two months, while weekly chart is showing strong support coming in the counter at Rs950/kg wherein a double bottom formation is formed at the same level on weekly charts(lower trend channel) that might give a confirmation of its upside in case of a closing above Rs1100/kg mark.
So this level should be watched very carefully by traders to initiate long positions. On the flip side, the counter is still trading near its strong resistance level as can be observed by the upper trend line. If prices are able to mark a close below Rs. 1020/kg (middle trendline), then one can expect some more selling pressure in the counter. For the next month, Rs.950 -1100/kg should be the trading range and a close on either side of the range will confirm it’s near term trend.
20 / 07 / 11 in
Copper gains on dollar & China-demand hopes
Copper hit its highest since mid-April on Tuesday as a weaker dollar and hopes Chinese demand will remain firm helped
offset investor anxiety over U.S. and European sovereign debt concerns.
Three-month copper on the London Metal Exchange was $9,782 a tonne in official rings, compared with Monday's close of $9,694 a tonne. The metal used in power and construction earlier hit 9,826 a tonne, its highest since April 12.
"We've seen quite a rebound in euro/dollar and equity markets ... It seems it is very much markets reconsidering that the debt crisis is not something that is going to weigh too much on global growth " Danske Bank analyst Christin Tuxen said.
"Base metals are rebounding on this, maybe reconsidering that the situation at least in Asia is not that bad and indeed in our view we're likely to see Chinese demand for raw materials bounce back quite significantly within the next few months."
The dollar dropped versus a basket of currencies with no resolution in sight for debt problems on either side of the Atlantic.
The White House is seeking a last-ditch plan with Congress to raise the U.S. debt ceiling and European governments are struggling to reconcile competing proposals for a second bailout for Greece while trying to prevent the crisis from spreading through the region.
"Despite all these uncertainties, we've seen copper very resilient to any downside risk and that could also be explained beyond the supply issues by what we see as healthy appetite from the Chinese despite their price sensitivity," said Xin Yi Chen, commodity analyst at Barclays Capital.
Investors are optimistic demand from top copper consumer China will remain strong in the second half of the year given little sign that its monetary tightening efforts had sharply slowed the world's No. 2 economy, which grew a faster-than-forecast 9.5 percent in the second quarter.
COPPER DEFICIT
Market participants also expect a deficit in global copper supply this year, with shortage risks increased by weather and labour unrest hitting major mines in Chile and Indonesia.
Copper inventories at LME warehouses rose 4,450 tonnes to 467,400 tonnes, latest data showed.
MCU-STOCKS
In macroeconomic news that may affect metals prices via currencies as well as giving an indication of demand for metal used in construction, investors will watch out for U.S. housing starts and permits for June, due at 1230 GMT.
Lead and zinc also hit their highest since mid-April.
Zinc, used in galvanizing was $2,471 in rings from $2,431 a tonne, having earlier hit $2,482. Battery material lead was at $2,762 from $2,730 a tonne, having hit $2,779 a tonne. Aluminium was $2,512 a tonne from $2,495.
Nickel , untraded in rings, was bid at $24,000 a tonne from $23,825.
Western Areas , Australia's third-largest nickel miner, is forecasting fiscal 2011/12 nickel production of 25,000-27,000 tonnes, versus a bumper 32,222 tonnes in the previous year, a company executive said.
Tin was at $27,550 from $27,350 a tonne.
"Overall we still see these firmer trends in the metals as likely to lead to better selling opportunities and would watch the charts careful for signs that the rallies are faltering," Basemetals.com analyst William Adams said in a note.
10 / 03 / 11 in
Strong Demand and New Markets Benefit Molybdenum
Molybdenum's main use is in high strength steel alloys. These alloys are used in numerous applications from large scale construction projects, the automotive sector and the energy sector. Molybdenum is irreplaceable due to its ability to reduce corrosion as well as its unique ability for high heat applications. These factors make molybdenum essential in energy projects around the world from nuclear power to renewable energy projects.
Every new nuclear reactor, as well as the modernization of current nuclear power plants, needs approximately 400,000 pounds of molybdenum for the reactors and piping in the power plants. In China alone there are 100 planned nuclear power plants in the works over the next few years. That's 40 million pounds of molybdenum needed for Chinese nuclear energy alone.
In the US plans to build nuclear power plants are heating up as President Obama has called for 80 percent of electricity to be generated from 'renewable sources', which includes nuclear power in the plan. As of right now there is 1 plant under construction, 6 planned and waiting for loan guarantees, and 24 proposed plants. Not all of these will make it through the permitting process but “it is expected that 4-6 new units may come on line by 2018, the first of those resulting from 16 license applications to build 24 new nuclear reactors,†according to The World Nuclear Association. If these plants make it through the permitting process the molybdenum market will see a huge rise in demand. Remember 400,000 pounds of moly is need for each power plant.
Mitsubishi Heavy Industries recently shipped two replacement reactor heads to nuclear power stations in the US. These “[r]eactor vessels are made of low-alloy steel made of manganese, molybdenum and nickel steel, a combination Mitsubishi said was resistant to the strong pressures inside a nuclear reactor,†reported Scott DiSavino, for Reuters. The modernization and maintenance of US nuclear power plants will continue to add demand for molybdenum.
The need for moly in the energy sector doesn't end with nuclear power either. If plans to ramp up solar and wind power take off, massive amounts for molybdenum will be needed. This demand will come from the towers used for wind turbines, especially in off shore wind power. CIGS Solar panels use a molybdenum base sheet on which to apply the photovoltaic material. The use of molybdenum in nanotechnology can also significantly increase the efficiency of coal power plants as well as dramatically increase computing speed of microprocessors. This nano revolution was covered on Moly Investing News last week.
Analysts are mixed on predictions for moly. Some have stated there may be a surplus in the market in 2011, however, others see the market for molybdenum in 2011 as strong. “Molybdenum will average $21.75 per pound ($47,850 per tonne) in 2011 thanks to continued strong demand and looming supply constraints,†according to a CPM forecast. Prices for molybdenum on the LME have risen since the start of the year from approximately $37,200 per tonne over $39,600 per tonne, the 15 month seller contacts are at $40,300 per tonne.
Prices are rising for this essential metal as steel demand is rising worldwide. The added demand from energy projects on top of the rebounding global economy's appetite for steel should apply upward pressure on price.
02 / 01 / 11 in
Stick With Commodities But Be Nimble In 2011 Says Goldman Sachs
Don't let the People's Bank of China spook you with its anti-inflationary fifth hike in bank reserve requirements this year. China's economic growth will continue to be robust and so will its need for the world's natural resources. Some raw materials will be more in demand than others.
China's feverish economic growth will keep demand for most industrial inputs high, and gold still looks good, too.
The investment mantra for 2011 is called differentiation, meaning that there will be relative differentials in performance among commodities, precious metals, energy, agricultural and base metals. Unlike 2008 when the commodity bubble burst and the entire asset class went down with stocks, or the early part of 2010 when expectation of a cheaper dollar rallied stocks and commodities, 2011 will be starkly different. QE2 will "provide cyclical stimulus" to the most cyclically tight commodities and have less impact on "commodities with excess supply capacity," according to Goldman Sachs ( GS - news - people )' Metals Weekly of Nov. 5.
You can start by being bullish about copper. There are only four days of copper supply on the London Metals Exchange and Shanghai. So, the State Council-funded Strategic Reserve Bureau (SRB) has been buying copper to build up its inventory during these last several volatile trading sessions. Iron ore and thermal coal prices have been holding firm in China as well. In contrast, China is believed to be selling zinc and aluminum out of its inventory.
So don't let the headlines about China putting on the brakes put you out of your preferred commodity plays for 2011. At least one British bank in China believes it's possible the Chinese will decide on a total ban of all commodity exports as they already have done in rare earths in order to control their economic short-term destiny.
Goldman Sachs' commodity research mavens predict that copper will be selling at an average price of $11,000 per metric ton, a sensational 35% return from the current level around $8,200 a ton. Goldman predicts "exceptionally large deficits (in copper) over the coming year."
Buying futures can leverage the return, though it is risky. Goldman recommends going long December 2011 copper. Other alternative ways to buy copper in the opinion of Standard Chartered ( SCBEF.PK - news - people ) Bank include purchasing common stocks like Freeport McMoran Copper and Gold, Jiangxi Copper (358 HK) and Philex Mining. Iron ore bulls can buy BHP Billiton ( BHP - news - people ) or more obscure plays like China Vanadium (893 HG) or Citic Pacific(267,HG), advises Standard Chartered.
Goldman Sachs also recommends a long position in the December 2011 COMEX contract for gold. Goldman is predicting a $1,650 an ounce price for gold in 2011, a 22% gain in value from the current $1,350 an ounce. Goldman bases the $1,650 price as the reward for seeing the return on 10-year TIPS go below 50 basis points. In other words, the lower the interest rates from monetary policy, the higher the gold price.
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The price of oil is not expected to rise much higher in 2011, but to remain in range between $85 and $95 a barrel, due to weak U.S. and European economies damping down the strength of emerging markets.
Goldman Sachs is looking for "softer medium-term outlooks for several agricultural commodities including wheat." After all, agricultural prices rose 14% from September 30 through October 29, due to lower stocks from bad weather. You missed cotton (up 76%), wheat (up 48%) and corn (up 32%). Note well that the California pension fund put off a massive commitment to commodities, as it missed the run up.
In short, you can still make money in commodities, but you have to pick the right ones and be nimble as hell.
12 / 12 / 09 in
We can't afford to ignore our coal resources
AS world leaders gather in Copenhagen for the climate change summit, the UK delegation should remember this: Britain is facing an energy crisis of untold proportions.
Alistair Buchanan, Ofgem's chief executive has warned that consumers
face energy cost rises of at least 14 per cent by 2016 with price spikes as high as 60 per cent.
Speaking on the BBC news recently, he declined to rule out energy blackouts that could see the lights go out and against this background we witness further protests at Radcliffe-on-Soar power station in Nottinghamshire.
Britain's energy security is in serious danger as a result of the policies followed first by the Tories and then by New Labour.
In recent years, the Government has conducted two energy reviews and still the crisis escalates and appears to be finally coming to a head in the year that has seen the 25th anniversary of the miners' strike that resulted in the decimation of our deep-mine coal industry.
It was, or should have been, obvious to energy policy makers that by 2020 our gas reserves would be at the fag-end and our oil reserves gone.
Yet nothing has been done to reduce our over-reliance on foreign
imports of gas, oil and coal.
We are now a net importer of energy. We import more gas than we produce and in 2008 we imported 44 million tonnes of coal at a cost £2bn, half of which came from Russia. Gas and coal represent 82 per cent of our energy requirements and for those who think coal is a fuel of the past we burn 60 million tonnes of coal a year but produce only 16 million tonnes ourselves, half from opencast and half from deep-mine production.
According to the Coal Authority, both the National Coal Board, in the late '70s, and later in 1990, British Coal, assessed Britain's
recoverable coal resources at 45 billion tonnes – 300 years worth at present consumption rates. In that time, we have only mined just over one billion tonnes.
Our operating reserves at existing mines in 1990 amounted to four billion tonnes, with a further two billion identified at what were then described as new mines. In other words, a possible 100 years of
reserves at present consumption rates.
The abandonment of these precious coal reserves have left us at the
mercy of unstable foreign importers of coal and gas. The spurious arguments used against exploiting our coal reserves are based on environmental concerns surrounding CO2 emissions.
Certain environmentalist lobbies, supported by other vested interests, have managed to convince many people that coal is a dangerous fuel that will damage the planet – evidenced by the campaigns waged against the power stations at Kingsnorth in Kent, Drax in Yorkshire and now Ratcliffe-on-Soar in Nottinghamshire.
If all our coal-fired power stations were closed, it would not effect the billions of tonnes of CO2 being pumped into the atmosphere by China and America alone.
Clean coal technology is an absolute must and here's why. In 2004, China emitted 4,707 million tonnes of carbon dioxide while America emitted 5,293 million tonnes. These amounts are projected to reach 11,239 and 7,950 million tonnes respectively by 2030 according to the International Energy Agency.
The only solution is to develop clean coal technology to tackle what is a worldwide problem and, since developing nations like China and India will burn their coal reserves and America will seek to reduce its over-reliance on imported oil by burning its coal, those who argue for the development of clean coal technology are the true environmentalists trying to save the planet for future generations.
A new up-to-date in-depth assessment of Britain's mineable coal
reserves is urgently needed with the aim of using our coal as a major strategic energy resource.
Such a strategy cannot be left to the short-term thinking of the market with its limited ability to provide the necessary investment.
We have allowed the crisis to develop over many years and the Government has a duty to ensure Britain's energy security at a price that the poorest in our society can afford.
22 / 06 / 09 in
Anglo stresses early-stage nature of Xstrata 'proposal'
The board of diversified mining group Anglo American confirmed on Sunday that it had indeed received a "preliminary proposal" from its smaller Swiss-based rival, Xstrata.
However, the London-domiciled company stressed in a statement, which it indicated had been issued in response to media speculation, that the "situation is at a very preliminary stage".
It added that the proposal "may or may not lead to a transaction".
In response to the Anglo statement, Xstrata confirmed that it had recently sent a "written proposal" to the Anglo board, in which it suggested that "a merger of equals" be considered.
Xstrata argued that it viewed the case for such a transaction as "highly compelling", highlighting, in particular, “substantial operational synergiesâ€, and the potential for enhanced shareholder returns from the “optimisation and reprioritisation of the combined company’s organic growth pipelinesâ€.
However, it too offered "no assurance that any transaction will be forthcoming".
14 / 04 / 09 in
China economy shows signs of recovery
China's economy is showing signs of a nascent recovery, but even officials who want to boost public confidence warn a rebound faces risks from the global crisis and is not yet certain.
Imports of oil, iron ore and other raw materials rose in March, reflecting the impact of Beijing's multibillion-dollar stimulus spending on industry. Home and auto sales are up, suggesting consumers might be more willing to spend.
A rebound for China, the world's third-largest economy, could help other countries by boosting demand for their exports, though analysts say China alone cannot propel the global economy out of its worst slump since the 1930s.
"I think they've turned the corner," said economist David Cohen of Action Economics in Singapore. "There is a sense that we are getting back on track with growth."
But Cohen and others caution it is still early and China could face trouble if trade weakens more than expected or consumer spending, housing sales and other private-sector areas fail to achieve a sustained rebound.
"Things probably will get a little bit worse before they get better," said economist James McCormack of Fitch Ratings.
Observers hope for a clearer picture when the government releases first-quarter economic growth figures Thursday.
The economy showed "better than expected positive changes in the first quarter" because of stimulus spending and some areas "are in a process of gradual recovery," Premier Wen Jiabao said over the weekend. But he warned against complacency.
"As the (global) crisis has not touched its bottom, we can hardly say that the Chinese economy alone has got out of the crisis," Wen said, according to state media.
Forecasts of Chinese growth this year range from 8 percent — the official target — to as low as 5 percent. That would be a drop from 2007's stunning 13 percent growth but still the fastest for any major country at a time when the U.S. economy, the world's largest, is mired in recession.
The 4 trillion yuan ($586 billion) stimulus aims to pump money into the economy mostly through higher spending on building highways and other public works. But its goal is to boost public confidence and encourage China's own thrifty consumers to spend more.
So far, the biggest impact has been to boost employment and revenues at state-owned construction companies and suppliers of cement and other building materials.
But some consumer areas are improving, possibly because of easier credit and other incentives. March auto sales rose to a monthly high of 1.1 million as buyers were lured by sales tax cuts and rebates. Home sales rose 23.1 percent in the first three months of the year from the same period of 2008, the government reported Monday.
Beijing wants such domestic consumption to reduce reliance on exports, which fell 17.1 percent in March from a year earlier.
The World Bank said last week China could start to recover this year, helping the rest of Asia to stabilize and possibly rebound. China is the top trading partner for many of its neighbors, which supply its factories with components and raw materials.
China is well-positioned to ride out the slump, economists say. Its state-owned banks avoided the turmoil that battered Western institutions. Government debt is low compared with other countries, giving Beijing room to borrow for its stimulus.
Eager to shore up public confidence and encourage consumers to spend, the government has been highlighting strong growth in bank lending as state companies borrow money for stimulus projects. Lending in March surged to a monthly high of 1.9 trillion yuan ($277 billion).
"We believe China's stimulus-led domestic recovery is well under way," said UBS economist Tao Wang in a report last week.
Wang said lending is growing so fast that Beijing's next move should be "taming credit growth" to reduce the risk of wasteful investment and bad debt that might imperil banks.
Also in March, iron ore imports rose 46.2 percent from the same month last year, while imports of coal were up 37.4 percent, according to customs data. Oil imports were down from a year earlier but up 33 percent compared with February.
But trade is still lackluster. The collapse in demand for Chinese exports wiped out at least 20 million jobs as factories closed. Communist leaders worry that more job losses could fuel unrest.
If global consumer demand fails to rebound until next year, "that would suggest there are more difficulties ahead for China and probably worse economic news to come," said Fitch's McCormack. "That suggests to us some of the numbers that are recovering now may have another leg down later in the year."
02 / 01 / 09 in
China turns screws on iron ore giants
JUST days into the new year the signs from China for our battered big miners are ominous.
According to reports out of Shanghai, the Chinese Government is seeking tighter control over iron ore imports to help drive down prices for the steel-making ingredient.
That's bad news for the world's biggest iron ore producers - Rio Tinto, BHP Billiton and Brazil's Vale - as it will give Chinese steel giant Baosteel much greater muscle in the current round of iron ore price talks.
Substantially reduced iron ore prices will put even more pressure on BHP and Rio, as they grapple with dramatic price falls across all major commodities.
Rio is especially vulnerable as it struggles with $US38.9 billion ($A55.3 billion) in debts in the face of the global financial crisis.
Annual iron ore contract price negotiations are shrouded in mystery but are believed to have kicked off in the weeks before Christmas.
Beijing reportedly wants closer monitoring of where iron ore shipments end up after their arrival in China's ports.
And it is looking at clamping down on the practice among import agents of making profits by stockpiling iron ore as a punt on future higher prices.
The new regulatory regime could hurt BHP and Rio as it will potentially reduce shipments of iron ore - Australia's second-biggest commodity export after coking coal - into China.
Iron ore demand has already softened dramatically in recent months as the global economic slowdown pulls in steel-intensive industries such as construction activity and car-makers. Global construction of crude steel experienced one of its biggest reversals in November, tumbling nearly 20 per cent to just 59 million tonnes when compared with the same month of the previous year.
In another bad omen China's first batch of coking coal imports for 2009 are nearly half the levels they were a year ago. China's Ministry of Commerce has decided on an initial quota of 5.78 million tonnes - down from 9.62 million tonnes at the start of last year.
That suggests Australia's biggest trading partner is shifting to greater use of domestically produced coking coal rather than imported product as economic times get tougher.
And it could not come at a worse time for coal producers already starting to suffer after a sharp drop in prices for the energy source.
Queensland's Macarthur Coal last month slashed its profit guidance, suspended dividends and laid off workers after chairman Keith de Lacy warned shareholders that it was impossible to predict when coal prices would improve.
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