China economy – Bizchina Update http://bizchina-update.com/ Thu, 22 Sep 2022 21:15:09 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://bizchina-update.com/wp-content/uploads/2021/10/icon-120x120.jpg China economy – Bizchina Update http://bizchina-update.com/ 32 32 August industrial production, retail sales https://bizchina-update.com/august-industrial-production-retail-sales/ Fri, 16 Sep 2022 02:01:00 +0000 https://bizchina-update.com/august-industrial-production-retail-sales/ August was marked by extremely hot temperatures in parts of China, causing temporary power rationing in some areas. Pictured on August 24, 2022, the central city of Chongqing is seen with the lights partially turned off to save energy during the heat wave. CGV | Visual Group China | Getty Images BEIJING — China released […]]]>

August was marked by extremely hot temperatures in parts of China, causing temporary power rationing in some areas. Pictured on August 24, 2022, the central city of Chongqing is seen with the lights partially turned off to save energy during the heat wave.

CGV | Visual Group China | Getty Images

BEIJING — China released data on Friday showing a pickup in growth in August from the previous month. The data also exceeded expectations across the board.

Retail sales rose 5.4% in August from a year ago, the fastest since the January-February period this year, according to figures released by the National Bureau of Statistics. August retail sales beat Reuters forecasts for 3.5% growth.

Among the generally encouraging data, retail sales took the biggest surprise, boosted by passenger car sales and helped from weak growth last August, said Hao Zhou, chief economist at Guotai Junan International. Retail sales were up 2.5% year-on-year in August 2021.

This year, restaurant sales recovered from a Covid-induced slump to rise 8.4% in August from a year ago, while auto and food sales also rose by significantly. That helped retail sales for the year to August rise 0.5% from a year ago.

Cosmetics and home furnishings were among the few categories showing lower sales in August compared to a year ago.

Online sales of physical goods rose 12.8% in August from a year ago, faster than July’s 10.1% growth, according to CNBC’s calculations of official data.

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Industrial production rose 4.2% in August from a year earlier, beating the 3.8% rise estimated in a Reuters poll of analysts. Despite a year-on-year decline in major categories such as cement and steel, automotive again proved to be a bright spot, with passenger car production up 33%.

Capital investment for the first eight months of the year rose 5.8%, above the 5.5% rise forecast by Reuters. Investment in the manufacturing sector increased the most, up 10% from the year-ago period. Year-to-date, infrastructure investment has grown at a slightly faster pace than in July.

Real estate investment for the year fell further in August, down 7.4% from the year-ago period, compared with a 6.4% decline for the year in July.

A demand problem

On Friday, National Bureau of Statistics spokesman Fu Linghui told reporters more than once that insufficient domestic demand was a significant problem. He pointed to more investment in infrastructure and manufacturing as ways to support growth.

Fu also said Covid outbreaks and extreme weather since August have affected the construction of some projects, slowing investment growth.

The unemployment rate for young people aged 16 to 24 fell slightly to 18.7% in August. It remained well above the overall unemployment rate in cities, which was 5.3% in August, down slightly from the previous month.

China’s consumer price index fell slightly from two-year highs to post a 2.5% year-on-year increase in August. But excluding food and energy, the index rose only 0.8%, again reflecting sluggish demand.

The collapse of the massive real estate sector also weighed on demand. A few weeks earlier, Chinese developer Country Garden described the property market as having “slid rapidly into a serious depression”.

Fu said stabilizing the real estate market needed more work and the industry was still in a “down period” despite some positive changes, according to a CNBC translation of the Mandarin remarks.

China’s economy remained under pressure in part because of Covid controls, which notably stranded tens of thousands of tourists on the tropical island of Hainan in August.

The summer month was also marked by extremely hot temperatures in parts of China, causing temporary power rationing in some areas.

“Generally, the national economy has weathered the impacts of multiple unexpected factors and maintained the momentum of recovery and growth with major indicators showing positive changes,” the National Bureau of Statistics said in a statement. A press release. “However, we should be aware that the international environment is still complicated and severe and the foundations for domestic economic recovery are not solid.”

Export growth slowed to 7.1% year-on-year in August, signaling that China’s growth engine may weaken as global demand weakens. Domestic demand remained weak, with imports increasing only 0.3% from a year ago.

“We expect the export momentum to continue to weaken over the coming months due to the high base effect and slowing global demand,” said Bruce Pang, chief economist and head of research for Greater China at JLL.

He said policy should focus on stimulating domestic demand, mainly by coordinating fiscal and industrial policies, while monetary policy plays a supportive role. “We believe massive additional stimulus will not be around the corner, but an adjustment and follow-up to existing policy measures,” he said.

Correction: This story has been updated to reflect that infrastructure investment grew at a faster rate in August than in July, and real estate investment fell 6.4% in the first seven months of the year compared to a year ago.

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Doyle McManus: China’s economy is slowing down, its population is aging. This could make it dangerous | app https://bizchina-update.com/doyle-mcmanus-chinas-economy-is-slowing-down-its-population-is-aging-this-could-make-it-dangerous-app/ Mon, 12 Sep 2022 09:36:25 +0000 https://bizchina-update.com/doyle-mcmanus-chinas-economy-is-slowing-down-its-population-is-aging-this-could-make-it-dangerous-app/ The Chinese economy is in trouble. The juggernaut that once seemed destined for world domination is slowing down – and not just in the short term. The projected growth of the Chinese economy this year has slowed to around 3%, missing the government’s 5.5% target by an embarrassing margin. × This page requires JavaScript. Javascript […]]]>

The Chinese economy is in trouble. The juggernaut that once seemed destined for world domination is slowing down – and not just in the short term.

The projected growth of the Chinese economy this year has slowed to around 3%, missing the government’s 5.5% target by an embarrassing margin.

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Beijing-based David Mahon details what’s happening in China’s economy https://bizchina-update.com/beijing-based-david-mahon-details-whats-happening-in-chinas-economy/ Sat, 27 Aug 2022 18:00:00 +0000 https://bizchina-update.com/beijing-based-david-mahon-details-whats-happening-in-chinas-economy/ By Gareth Vaughan Against the backdrop of a sweltering summer, China’s Covid-zero policy rumbles, the country’s commercial real estate sector falters and youth unemployment soars. To talk about all these questions and more, I spoke to Beijing-based David Mahon, managing director of Mahon China Investment Management, for the latest episode of interest.co.nz’s Podcast of interest. […]]]>

By Gareth Vaughan

Against the backdrop of a sweltering summer, China’s Covid-zero policy rumbles, the country’s commercial real estate sector falters and youth unemployment soars.

To talk about all these questions and more, I spoke to Beijing-based David Mahon, managing director of Mahon China Investment Management, for the latest episode of interest.co.nz’s Podcast of interest.

As for the weather, Mahon says it’s China’s hottest summer since records began in 1961, and surpassed anything he’s seen in the nearly 40 years that he lived in China.

It was also dry, leading to “a complete collapse” of key hydroelectric power in the Yangtze River and its tributaries. This has led to factory closures and limited power supplies to some cities, with the impact stretching from Sichuan province to Shanghai.

“It has major ramifications on the economy,” Mahon said. “This year’s weather means that the overall harvest will also be poor. »

Regarding the battle against Covid-19, Mahon describes the experience of being tested every three days, the challenges of business travel, locked-out customers running out of food, and when and how he thinks that the government will begin to relax the Covid-zero policy.

“Covid policies are baffling at the moment. I think China knows that whatever happens there will be a death toll once they start to relax like New Zealand finds out,” says Mahon.

In the podcast, he also discusses how China’s strategic reserves are helping it fight inflation, interest rates, supply chains, problems in the commercial real estate sector, high unemployment among young people and general demographic challenges, as well as recent clashes between bank depositors and the police. .

“The longer-term problem is that in general China won’t have enough workers in the industry, and they’re going to have to look at a migrant worker program, something that they wouldn’t even have started on. design to date,” Mahon says of China’s demographic challenges.

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China’s economy is hampered by the dryest riverbeds since 1865 https://bizchina-update.com/chinas-economy-is-hampered-by-the-dryest-riverbeds-since-1865/ Tue, 23 Aug 2022 22:32:06 +0000 https://bizchina-update.com/chinas-economy-is-hampered-by-the-dryest-riverbeds-since-1865/ WUHAN (BLOOMBERG) – Wan Jinjun, a 62-year-old retiree who swam the Yangtze River almost every day for the past decade in Wuhan, said he had never seen such drought before. An extreme summer has wreaked havoc on Asia’s longest river, which crosses China for around 6,300 km and powers farms that provide much of the […]]]>

WUHAN (BLOOMBERG) – Wan Jinjun, a 62-year-old retiree who swam the Yangtze River almost every day for the past decade in Wuhan, said he had never seen such drought before.

An extreme summer has wreaked havoc on Asia’s longest river, which crosses China for around 6,300 km and powers farms that provide much of the country’s food and massive hydroelectric power stations, including the dam of the Three Gorges – the largest power station in the world.

A year ago, the water lapped almost as high as the bank where Wan swims. Now the level is at its lowest for this time of year since records began in 1865, exposing stretches of sand, rock and seeping brown mud that smells of rotting fish.

“And it keeps going down,” said Wan, who last week had to descend nearly 100 steps – usually hidden below the waterline – to cool off on a sweltering 40 degree Celsius day.

Falling Yangtze water levels have slowed power generation at many key hydropower plants, causing energy chaos in many parts of the country.

Megacities, including Shanghai, are turning off lights, escalators and reducing air conditioning. Tesla has warned of supply chain disruptions at its Shanghai factory, and others like Toyota and Contemporary Amperex Technology, the world’s top maker of batteries for electric vehicles, have closed factories.

Although the energy crisis is far less severe than in 2021 – when a shortage of coal led to nationwide power cuts – it adds to the challenges authorities face in reviving an already battered economy. frequent Covid-19 closures and a real estate crisis.

And the time comes months before President Xi Jinping seeks an unprecedented third term. Senior Chinese officials, including Mr. Xi and Premier Li Keqiang, had earlier promised to prevent such repeats.

The southwestern province of Sichuan, which is suffering the region’s worst drought since the 1960s, is by far the hardest hit given its heavy reliance on hydropower. As dam output has halved in the region, a grueling heat wave has boosted electricity demand by about a quarter.

It’s an added strain on an energy grid that serves a population the size of Germany and supplies the industrial centers that house the factories of Tesla’s suppliers.

Hydropower is China’s biggest source of clean energy, accounting for about 18% of the country’s electricity generation in 2020, according to BloombergNEF. The country also has the largest fleet of solar panels and wind turbines in the world, and is increasing investment in renewable energy as it tries to reduce its reliance on imported fuel. Chinese companies invested US$98 billion (S$136 billion) in clean energy in the first half of 2022, more than double the amount in the same period of 2021.

The power shortage in Sichuan shows that hydropower, generally considered the most stable renewable energy source, is still not as reliable as coal, according to BloombergNEF analyst Wei Hanyang.

This raises questions about how easily China can move away from its dependence on fossil fuels, given that wind and solar are even less stable, Wei said.

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Oil prices fall again as China’s economy stutters https://bizchina-update.com/oil-prices-fall-again-as-chinas-economy-stutters/ Wed, 17 Aug 2022 07:00:00 +0000 https://bizchina-update.com/oil-prices-fall-again-as-chinas-economy-stutters/ LONDON — Oil prices fell nearly 5% on Monday on data showing China’s economic recovery stutters under Covid-19 restrictions and a plummeting property sector. Brent North Sea crude fell 4.8% to $93.46 a barrel, while West Texas Intermediate fell 4.5% to $87.99 a barrel. Stock markets generally stabilized and the dollar traded mixed as investors […]]]>

LONDON — Oil prices fell nearly 5% on Monday on data showing China’s economic recovery stutters under Covid-19 restrictions and a plummeting property sector.

Brent North Sea crude fell 4.8% to $93.46 a barrel, while West Texas Intermediate fell 4.5% to $87.99 a barrel.

Stock markets generally stabilized and the dollar traded mixed as investors welcomed signs of a slowdown in US inflation, which nonetheless remains at its highest level in decades.

“It’s been a disappointing start to the week in financial markets with undying optimism from investors clashing with the reality of Chinese economic data,” noted Craig Erlam, senior market analyst at Oanda.

China’s central bank cut key interest rates in a surprise move on Monday as a series of data showed weakness in the world’s second-largest economy.

Figures showed China’s July industrial production and retail sales growth fell short of expectations.

Industrial production rose 3.8% year-on-year, but down from 3.9% in June and well below analysts’ forecasts.

“The risk of stagflation in the global economy is increasing, and the foundations for national economic recovery are not yet solid,” warned China’s National Bureau of Statistics.

Stagflation refers to long-lasting high inflation combined with rising unemployment and low growth.

Beijing’s rigid adherence to a zero-Covid strategy has held back economic recovery as rapid lockdowns and lengthy quarantines hurt business activity and the recovery of consumption.

Retail trade figures for July confirmed the fragility of consumer confidence, said Michael Hewson, an analyst at CMC Markets.

“This weakness in the Chinese economy runs counter to the struggle to adapt to a zero-Covid policy, which the government shows little sign of easing, amid rising cases,” said Hewson.

“Troubles in the real estate sector don’t help either, where many homebuyers are halting mortgage payments to protest delays in completing new homes.”

Hong Kong ended down 0.7% while Shanghai closed slightly lower.

Tokyo stood out in Asian trade, climbing 1.1% as GDP data showed the Japanese economy recovering after the government lifted Covid-19 restrictions on businesses.

European stocks were flat at the midpoint as investors await Wednesday’s release of the minutes of the Fed’s last policy meeting in July for clues on the U.S. central bank’s interest rate plans .

Slowing inflation in the United States has sparked debate over whether the Fed could move away more quickly from its recent stance of aggressively raising borrowing costs.

Markets fear that after successive three-quarter-point increases, further increases of a similar magnitude could stifle the economic recovery.

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China’s economy deteriorates with COVID and inflation bites https://bizchina-update.com/chinas-economy-deteriorates-with-covid-and-inflation-bites/ Wed, 17 Aug 2022 01:51:34 +0000 https://bizchina-update.com/chinas-economy-deteriorates-with-covid-and-inflation-bites/ The only bright spot in the data was a 24% increase in exports but, with central banks around the world tightening monetary policies, global growth expected to slow and its relationship with the West increasingly turbulent, the China cannot turn to exports to fuel an economic recovery. The market response to the data has been […]]]>

The only bright spot in the data was a 24% increase in exports but, with central banks around the world tightening monetary policies, global growth expected to slow and its relationship with the West increasingly turbulent, the China cannot turn to exports to fuel an economic recovery.

The market response to the data has been telling. Oil prices have fallen sharply – oil is now trading around $92 a barrel, down from over $98 a barrel at the end of last week – along with other commodities like copper, nickel and agricultural products. Traders clearly see the Chinese economy, and therefore its demand for commodities, fading

The reasons for the crackle within what was, for decades, a mighty economy have been well documented.

The crisis in the real estate sector is making Chinese consumers cautious and reducing their consumption.Credit:Getty

The sudden imposition of rigid debt limits on property developers imploded the real estate market which was one of the main drivers of this growth. Most major developers are on life support. Hundreds of projects are stalled and incomplete. The suppliers have not been paid and the buyers who have paid for these unbuilt apartments are revolting and refusing to honor their mortgages.

As real estate is at the heart of Chinese household wealth, the crisis in the real estate sector is making consumers cautious and reducing consumption. Efforts to stimulate consumer activity through tax incentives and easier access to credit are failing. Credit is available, but demand is minimal.

The COVID-zero policy was supposed to be refined to be more targeted earlier this year, but China’s cities and industries are still experiencing abrupt lockdowns that are adding to its citizens’ anxieties and undermining industrial activity.

The elements are not cooperating with Xi’s desire for a smooth path to his upliftment.

These influences on the economy could be attributed to policy mistakes, or at least crude execution.
China has also experienced extreme weather conditions. A drought in southern China has led to hydropower shortages, prompting power rationing and plant shutdowns to save electricity for households. Agricultural production is threatened by falling water levels in the Yangtze River. There have been massive floods in northern China.

The elements are not cooperating with Xi’s desire for a smooth path to his upliftment.

Chinese authorities have been reluctant to respond to threats to growth and financial stability posed by the housing slump, growing mortgage boycotts and COVID-19-related restrictions.
Their traditional response – large-scale infrastructure investment – ​​has been fairly muted, perhaps because of the extent of waste in previous programs and perhaps because these programs have had diminishing impacts.

This week, however, Chinese Premier Li Keqiang urged local government leaders to adopt measures that would boost growth and consumption and provide more fiscal support through bond issues to fund investment. He also asked them to balance their responses to COVID-19 with the need to generate more economic growth.

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There were also reports on Tuesday that Beijing ordered its state-owned China Bond Insurance Co to provide credit support – to underwrite – bond issues by some of the biggest developers to enable them to access debt markets that have been closed to them by a vague pursuit of defaults.

Whether or not this is a solution is unclear. Offshore bondholders have been burned by the implosions with deposed real estate giant China Evergrande and many of its peers. A 29% drop in real estate sales in July could suggest that there will be little demand for new apartments, even if they are built.

Property prices in China have fallen for 11 consecutive months, so even those who have pre-purchased properties will not want to resume servicing their mortgages even if the apartments are completed.

The People’s Bank of China’s decision does not bode well for a significant drop in Chinese interest rates. The central bank is focused on controlling China’s relatively low inflation rate and, in any event, if there is no demand for credit, cutting interest rates has minimal effect .

She would also worry that too big a change in China’s interest rate structure could, in an environment where its monetary and fiscal policies diverge from those of the West, precipitate an exodus of foreign capital and a forced devaluation of its change.

The last thing China — or Xi — would want, on top of existing challenges, is the kind of currency crisis it experienced in 2015 when a currency devaluation forced it to burn around $320 billion of its foreign currency reserves to arrive at an estimate. $1 trillion in capital outflows and end the sell-off panic in its financial markets.

It would certainly spoil an already sour mood as the national convention approaches.

In a year where everything that could go wrong seems to go wrong, there won’t be much to celebrate for anyone but Xi.

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Why China’s economy is slowing down https://bizchina-update.com/why-chinas-economy-is-slowing-down/ Tue, 16 Aug 2022 07:00:00 +0000 https://bizchina-update.com/why-chinas-economy-is-slowing-down/ China is slowing rapidly and the government is taking only modest steps to try to prevent the world’s second-largest economy from outright contraction. Why is this important: Although it lags behind the United States in size, the Chinese economy has been the largest source of global GDP growth for most of the past two decades, […]]]>

China is slowing rapidly and the government is taking only modest steps to try to prevent the world’s second-largest economy from outright contraction.

Why is this important: Although it lags behind the United States in size, the Chinese economy has been the largest source of global GDP growth for most of the past two decades, meaning it is a global engine of growth. profitability of companies, investment activity and demand for raw materials.

Driving the news: A series of disappointing economic updates this week showed that Chinese growth was still sluggish on several fronts.

  • Its industrial sector has again slowed down. Industrial production rose just 3.8% in July from a year earlier – and well below expectations of 4.5%.
  • China’s housing crisis continues to hurt. Fixed investment – of which housing is an important component – grew only 5.7% in the first seven months of the year, compared to the same period in 2021. (In 2021, this figure was 10.3% higher year over year from July.)
  • Nor are consumers picking up the slack. Retail sales in July rose just 2.7% year over year, well below the 5% expected.

The context: In the recent past, faced with a downturn, Chinese policymakers have been quick to turn to proven tools in an attempt to kick-start growth. They understood…

  • Inject money into investment in public infrastructure.
  • Design a borrowing boom to fuel domestic spending.
  • Achieve steep interest rate cuts.

The plot: Despite China’s current economic slump, there are no signs that the government is determinedly trying to sustain growth.

  • In past downturns, the broadest measure of any type of credit to the economy in China – known as “total social financing” – has jumped, a sign that the government wanted to increase debt to offset the meltdowns.
  • A report on Friday showed total social financing was well below expectations as the government seemed unwilling to use a debt-driven boom as a source of growth.

Yes, but: The People’s Bank of China cut interest rates by a miniscule tenth of a percentage point on Monday – a move most analysts say is modest and unlikely to revive economic activity.

The bottom line: The ruling Chinese Communist Party knows that the breakneck pace of Chinese economic growth that has prevailed over the past few decades is unlikely to be matched. But unlike decades past, they don’t seem particularly worried about it.

  • For the rest of the world, this may mean that China will be a less reliable engine of growth in the years to come.

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The plunge in dry bulk transport: a bad sign for the Chinese economy? https://bizchina-update.com/the-plunge-in-dry-bulk-transport-a-bad-sign-for-the-chinese-economy/ Tue, 16 Aug 2022 07:00:00 +0000 https://bizchina-update.com/the-plunge-in-dry-bulk-transport-a-bad-sign-for-the-chinese-economy/ It wasn’t just container shipping that brought in the money last year. Dry bulk shipping had its best year in a decade. This year is different. Container spot rates have fallen, but contract rates are up, supporting average rates. Ongoing port congestion is tying up container ships and partly offsetting the decline in freight demand. […]]]>

It wasn’t just container shipping that brought in the money last year. Dry bulk shipping had its best year in a decade. This year is different.

Container spot rates have fallen, but contract rates are up, supporting average rates. Ongoing port congestion is tying up container ships and partly offsetting the decline in freight demand. Container lines will earn even more in 2022 than in 2021.

Not so dry bulk. Spot rates have fallen and bulk carrier owners are much more exposed to spot prices than container lines. Dry bulk congestion has eased, freeing up significant capacity on the market. Owners of dry bulk carriers could be back in the red by the end of the year.

China appears to be the culprit for much of the dry bulk reversal, especially for large bulk carriers known as Capesizes (vessels with a capacity of around 180,000 deadweight tons or DWT) which are heavily dependent on Chinese imports of iron ore and coal.

“The Cape Town market continues to be as appetizing as a bucket of prawns on a hot day,” broker FIS wrote on Tuesday. “While the index’s decline has slowed today, that’s mostly because we can’t really fall much further as we get closer to Earth’s core rapidly.”

Tariffs for sub-Capesize bulk carriers known as Panaxes (65,000-90,000 DWT) and Supramaxes (45,000-60,000 DWT) – which carry a wide variety of cargo, are less dependent on China and have tariffs more in line with movements in global GDP – are also sinking.

What is happening in the dry bulk market could be an indicator of worsening economic difficulties in China and elsewhere.

The feeling is ‘the worst in many years’

By October, average Capesize rates were over $80,000 per day, and some individual ships were earning over $100,000 per day. On Tuesday, the Baltic Capesize Index pegged fares at just $8,783 per day. It’s not only well below the all-inclusive break-even point, which includes financing costs, it’s below operating expenses (crew, stores, etc.)

Freight futures are also down. Brokerage SSY said Capesize forward freight deals for calendar year 2023 were offered Tuesday at $14,900 per day and 2024 contracts at $14,750 per day.

According to Breakwave Advisors, founder of ETF Breakwave Dry Bulk Shipping (NYSE:BDRY), “Freight futures, especially those expiring beyond next month, are purely driven by expectations. Earlier this year, memories of last year’s daily rates of $100,000 raised hopes of a repeat, driving futures to inexplicably frothy levels that have now snapped back to reality.

“The Ongoing Cash Market Collapse Is Negatively Impacting Trader Sentiment [and is creating] very significant losses on many freight books.

“The weak market reflects China’s current recession in the real estate sector… [which is] very crucial to the expedition,” Breakwave said. “It’s something that should have been easily identifiable months ago. But it wasn’t, as traders were blinded by vivid memories of the past. Currently, the sentiment is the worst it has ever been. been for many years.

Chinese recovery to the rescue?

China’s steel production – which underpins imports of iron ore and coal – fell to 907 million tonnes in July, down 6% from June, according to the World Steel Association.

The hope in dry bulk shipping circles is that China will unveil a major stimulus package in the second half of the year to offset economic hits from shutdowns and the real estate crisis.

“Our view is that absent a historic collapse in the Chinese economy, the coming stimulus efforts will serve as a catalyst for a major resupply of iron ore, and therefore, a rapid increase in demand. dry bulk,” Breakwave said.

The counter-argument: According to a report by the Australian Financial Review, Morgan Stanley thinks China is reluctant to roll out significant levels of stimulus; that even if it did, there would be a six-month lag before it materially appeared on commodity markets; and China’s domestic iron ore stocks are currently high.

Prices for medium and small bulk carriers are also falling

During parts of the 2021 dry bulk rally, as well as this year, smaller bulk carriers have outperformed larger ones. Smaller ships still perform better than Capesizes, but at lower rates; the sub-Cap ship classes are also retreating.

According to Clarksons Securities, average Supramax spot rates were the equivalent of $17,700 a day on Tuesday. Supramaxs earned almost double in March.

Panamax rates had fallen to $17,000 a day on Tuesday. Panamax rates approached $30,000 per day in March.

(Chart: Clarksons Securities. Data: Clarkson Research Services, Clarksons Securities)

Dry Bulk Stocks Head South

US-listed dry bulk stocks have performed exceptionally well in 2021, posting triple-digit gains. They continued their ascent in the first five months of the year, despite negative news about China’s economy due to COVID-19 lockdowns and that country’s real estate crisis.

However, since the beginning of June, dry bulk inventories have trended lower, in line with the evolution of rates and freight futures. Star Bulk (NASDAQ:SBLK) – whose ships earn more from their exhaust scrubbers – is down 22%, Safe Bulkers is down (NYSE:SB) 23%, Grindrod (NASDAQ: GRIN) by 26%, Golden Ocean (NASDAQ: GOGL) 30%, Eagle Bulk (NASDAQ: EGLE) 32% and Genco Shipping & Trading (NYSE: GNK) – which has a high exposure to Capesize – 38%.

(Graphic: Koyfin)

Click for more articles by Greg Miller

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Oil prices plummet on potential Iran deal, stuttering China’s economy https://bizchina-update.com/oil-prices-plummet-on-potential-iran-deal-stuttering-chinas-economy/ Mon, 15 Aug 2022 07:00:00 +0000 https://bizchina-update.com/oil-prices-plummet-on-potential-iran-deal-stuttering-chinas-economy/ Stock markets were broadly flat and the dollar traded mixed as investors welcomed signs of a slowdown in US inflation, which nevertheless remains at its highest level in decades. “Dark clouds of recession appear to be emerging over the global economy, with the latest Chinese data reinforcing these fears,” said market analyst Michael Hewson at […]]]>

Stock markets were broadly flat and the dollar traded mixed as investors welcomed signs of a slowdown in US inflation, which nevertheless remains at its highest level in decades.

“Dark clouds of recession appear to be emerging over the global economy, with the latest Chinese data reinforcing these fears,” said market analyst Michael Hewson at CMC Markets UK.

China’s central bank cut key interest rates in a surprise move on Monday as a series of data showed weakness in the world’s second-largest economy.

Figures showed China’s July industrial production and retail sales growth fell short of expectations.

Industrial production rose 3.8% year-on-year, but down from 3.9% in June and well below analysts’ forecasts.

“The risk of stagflation in the global economy is increasing, and the foundations for national economic recovery are not yet solid,” warned China’s National Bureau of Statistics.

Stagflation refers to long-lasting high inflation combined with rising unemployment and low growth.

Beijing’s rigid adherence to a zero-Covid strategy has held back economic recovery as rapid lockdowns and lengthy quarantines hurt business activity and the recovery of consumption.

Hewson added that “problems in the real estate sector don’t help either, where many homebuyers are halting mortgage payments to protest delays in completing new homes.”

– Iran speaks –

Meanwhile, Iran’s foreign minister said Tehran would present its “final” proposal later on Monday on talks to revive its 2015 nuclear deal with world powers, after Washington agreed to key demands.

A deal would mean that Iran’s crude production of 2.5 million barrels a day would no longer be under international sanctions and help ease supply constraints that have driven prices up.

“Iran would flood the market,” said analyst Aditya Saraswat of energy research firm Rystad, who added the country could increase production by another million barrels a day.

Oil prices, which had already been significantly lower according to Chinese data, pushed even lower and recorded daily declines of more than 5%, before later recovering some of their losses.

Major European stock markets ended with modest gains as Wall Street stocks plunged in morning trading.

Market analyst Fawad Razaqzada of City Index and FOREX.com said talk of a US recession is back after a key industry survey dipped into negative, a sign of deterioration commercial conditions.

Markets are also eagerly awaiting Wednesday’s release of the minutes of the Fed’s last policy meeting in July for clues about the U.S. central bank’s interest rate plans.

Investors fear that after successive increases of three-quarters of a point, any further increases of a similar magnitude will stifle the economic recovery.

The negative reading of the new orders question from the New York Federal Reserve’s Empire State Manufacturing Survey – compared to July’s positive result – shows that interest rate hikes may already have an effect on the slowdown activity that fueled inflation.

Patrick O’Hare, an analyst at Briefing.com, called the drop in stock prices a reflection of “weakening demand that comes with a weaker economy and, by extension, a weaker earnings growth prospects.

– Key figures around 3:30 p.m. GMT –

North Sea Brent: 4.0% decline to $94.21 a barrel

West Texas Intermediate: DOWN 4.1% to $88.28 a barrel

New York – Dow Jones: DROP of less than 0.1% to 33,742.42 points

EURO STOXX 50: UP 0.3% to 3,787.61

London – FTSE 100: 0.1% higher at 7,509.15 (close)

Frankfurt – DAX: UP 0.2% to 13,816.61 (closing)

Paris – CAC 40: UP 0.3% to 6,569.95 (closing)

Tokyo – Nikkei 225: 1.1% higher at 28,871.78 (close)

Hong Kong – Hang Seng Index: DOWN 0.7% to 20,040.86 (close)

Shanghai – Composite: FLAT at 3,276.09 (closing)

Euro/dollar: DOWN to $1.0187 from $1.0261 on Friday

Pound/dollar: DOWN to $1.2082 from $1.2135

Euro/pound: DOWN to 84.37 pence vs. 84.53 pence

Dollar/yen: DOWN to 133.06 yen from 133.50 yen

This story was published from a news feed with no text edits.

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Chinese economy: China unexpectedly lowers key rates amid disappointing economic data https://bizchina-update.com/chinese-economy-china-unexpectedly-lowers-key-rates-amid-disappointing-economic-data/ Mon, 15 Aug 2022 07:00:00 +0000 https://bizchina-update.com/chinese-economy-china-unexpectedly-lowers-key-rates-amid-disappointing-economic-data/ China’s central bank lowered key rates on Monday in a surprise move to boost demand, with data showing an unexpected slowdown in the economy in July as factory and retail activity were squeezed by Beijing’s zero COVID policy and a real estate crisis. The grim string of numbers indicate the world’s second-largest economy is struggling […]]]>
China’s central bank lowered key rates on Monday in a surprise move to boost demand, with data showing an unexpected slowdown in the economy in July as factory and retail activity were squeezed by Beijing’s zero COVID policy and a real estate crisis.

The grim string of numbers indicate the world’s second-largest economy is struggling to shake off the hit to June quarter growth from strict COVID restrictions, prompting some economists to revise their projections downward.

Industrial production rose 3.8% in July from a year earlier, according to the National Bureau of Statistics (NBS), below the 3.9% expansion in June and a 4 .6% expected by analysts in a Reuters poll.

Retail sales, which only just returned to growth in June, rose 2.7% from a year ago, missing the forecast for growth of 5.0% and growth of 3.1 % observed in June.

“Data from July suggests the post-lockdown recovery has run out of steam as the one-time boost from reopening faded and mortgage boycotts sparked further deterioration in the real estate sector,” said Julian Evans- Pritchard, senior China economist at Capital Economics.

“The People’s Bank of China is already reacting to these headwinds by increasing its support… But with credit growth proving less sensitive to policy easing than in the past, this is unlikely to be enough to prevent further economic weakness. .”

Local stocks gave up earlier gains after the data, while the yuan weakened to a one-week low against the dollar and the Australian and New Zealand currencies pulled back from their recent highs of two month.

China’s economy narrowly escaped a contraction in the June quarter, hampered by the Shanghai mall lockdown, a deepening housing market slowdown and still-weak consumer spending.

Risks still abound as many Chinese cities, including manufacturing hubs and popular tourist sites, imposed lockdown measures in July after new outbreaks of the more transmissible Omicron variant were discovered.

The real estate sector, which was further shaken by a mortgage boycott which weighed on the morale of buyers, deteriorated in July. Property investment fell 12.3% in July, the fastest pace of the year, while the decline in new sales steepened to 28.9%.

Nie Wen, a Shanghai-based economist at Hwabao Trust, lowered his forecast for third-quarter gross domestic product growth by 1 percentage point to 4-4.5%, after weaker-than-expected data. “Now it looks increasingly difficult to achieve even the 5-5.5% growth in the second half.”

BALANCE

To support growth, the central bank on Monday unexpectedly lowered interest rates on major lending facilities for the second time this year.

Chinese policymakers are trying to balance the need to shore up a fragile recovery and root out new COVID clusters. As a result, the economy is expected to miss its official growth target this year – set at around 5.5% – for the first time since 2015.

NBS spokesman Fu Linghui attributed July’s weakness to sporadic COVID outbreaks and heat waves in southern China that affected business, amid a slowing global economic recovery and high inflation.

In the eastern province of Zhejiang, the city of Yiwu, a key global supplier of small, inexpensive goods, has been grappling with COVID-related disruptions since July. Many parts of the city have been plunged into an extended lockdown since August 11.

“We have stopped production at the factory since the city imposed a ‘silent mode,'” said a sales manager at a Yiwu factory that manufactures consumer goods.

Investment in fixed assets, which Beijing hopes will offset the slowdown in exports in the second half, rose 5.7% in the first seven months of the year from the same period a year earlier, against a forecast rise and fall of 6.2% from a jump of 6.1% Jan-June.

The employment situation remained fragile. The national survey-based unemployment rate fell slightly to 5.4% in July from 5.5% in June, although youth unemployment remained stubbornly high, hitting a record high of 19.9% ​​in July.

The rate cut and weak activity data come after official figures on Friday showed new yuan lending fell more than expected in July as businesses and consumers remained cautious about leverage.

However, Wang Jun, director of the China Chief Economist Forum, sees limits to further stimulus and believes authorities will instead focus on implementing existing policies even if economic weakness persists.

“We are now facing a typical liquidity trap problem. No matter how weak the credit supply, businesses and consumers are cautious about taking on more debt,” Wang said. “Some of them are even repaying their debt early. This could herald a recession.”

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