Friday May 27, 2005 - 11:32:13 GMT
Share This Story
Black Swan Capital - www.blackswantrading.com
Comdols vulnerable to slowing Chinese demand
“Reality, as usual, beats fiction out of sight.”
Here are some interesting stats from another excellent recent issue of Weldon’s Money Monitor, by Greg Weldon, regarding Chinese commodities demand. These stats don’t seem to bode well for commodity prices or commodity currencies:
• Steel Product Imports, Jan-April … down (-) 36.7% yr-yr
• Steel Product Exports, Jan-April … up + 196.2% yr-yr.
“Yes, a nearly +200% year-year rise in Chinese exports of steel products was revealed in the latest trade data…the actual amounts of material being shipped, posted for the month of April …
• Steel Product Imports … 2,560,000 tonnes
• Steel Product Exports … 2,070,000 tonnes
• Kerosene Imports, Jan-April … down (-) 11.5% yr-yr
• Kerosene Exports, Jan-April … up + 42.2% yr-yr
• Light Diesel Fuel Imports, Jan-April … down (-) 72.3% yr-yr
• Light Diesel Fuel Exports, Jan-April … up + 137.6% yr-yr
• Naphtha Imports, Jan-April … down (-) 99.9% yr-yr
• Naphtha Exports, Jan-April … up + 169.9%
• Fuel Oil Imports, Jan-April … down (-) 7.8% yr-yr
• Fuel Oil Exports, Jan-April … up + 74.1% yr-yr
• Soyoil Imports, Jan-April … down (-) 47.9% yr-yr
• Rapeseed Oil Imports, Jan-April … down (-) 46.0% yr-yr
• Sugar Imports, Jan-April … down (-) 51.2% yr-yr
• Cotton Imports, Jan-April … down (-) 55.8% yr-yr
• Rice Imports, Jan-April … down (-) 28.9% yr-yr.”
We have been expecting a demand slowdown in China for a while—and have been wrong for a while. A China bull might say these stats don’t prove China is slowing; they simply show that China is producing more domestically to meet demand. Maybe that is true. We still think slowing (part and parcel to the cooling of the Shanghai property market).
Either way you see it, there is an abundance of supply in these commodities (or condos) based on the stats. And since the laws of supply and demand have yet to be repealed (though many communists central committees have tried doing that over the years), rising supply relative to demand is usually the path to lower prices.
If our analysis is correct, or even plausible, we think the Australian dollar has no business being where it is given Australia’s growth expectations seem so tightly intertwined with Chinese commodities demand.
Maybe we are missing an important piece of the puzzle—that would be no surprise; but based on the background we see shaping up the Aussie looks extremely vulnerable at these levels.
Black Swan Capital
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."