Archive for Asia

Mongolia back to 2006… That was the first time it sought a rail loan from China. A decade later it repeats it seeks$1.3 Billion from China to Complete long delayed Gobi Coal Railway

Incredible but true.

Bloomberg report — Feb 22, 2016 Mongolia is seeking a $1.3 billion loan from the Export-Import Bank of China to complete a railway connecting its Tavan Tolgoi coal deposit with the Chinese border, a project that has stalled because of lack of funds.

To read the entire article, go to bloom.bg/1mU7yDE

Officials from Mongolian Railway SOSC are meeting in China for talks with the bank to secure the loan, Idesh Ivshin, the company’s head of projects, said Monday in an interview in Ulaanbaatar.

The 240-kilometer (150-mile) railway will increase export volumes and lower the cost of transporting coal to Mongolia’s biggest customer at a time when weak prices are tightening margins. Coal is Mongolia’s nation’s second-largest export earner, accounting for $556 million last year. The Ministry of Finance may also offer a government guarantee, said Manduul Nyamdeleg, Head of Financial Markets and Insurance Division.

These are practically the same terms that many consultants, including myself, have been suggesting to Mongolia for about a decade.

The proposal would need to be ratified by the Mongolian cabinet. That ratification is not a sure thing.

He believes that the railway could be completed by 2018 if work begins AGAIN this year.

According to terms under discussion, the Export-Import Bank would appoint a Chinese contractor to construct the railway, Idesh said. That would replace the existing agreement with South Korea’s Samsung C&T, which has stalled over a debt of more than $30 million that the railway says it can’t pay due to lack of funds. The two sides are negotiating a settlement, according to Idesh.

THE ACTUAL FACTS ARE MORE LIKELY THAT the Mongolian government either can’t or refuses to pay the giant KOREAN Samsung company for work on parts of the under obstruction already “expensed” Gobi project.

An official at the Export-Import Bank of China’s press office in Beijing told Bloomberg reporters that he couldn’t immediately comment.

Rail freight data shows ten to eleven percent China contraction year over year

21 August report

Not yet widely reported.

State news outlet Xinhua on Tuesday reported that China’s rail freight volume had dropped by nearly 11% (10.9%) on a year-on-year basis during the month of July 2015.

The rail freight handled was 278.9 million tonnes for the month this year.

For the first seven months of 2015, China’s rail freight has dropped by 10.2% to 1.98 billion tonnes compared to the same 7 month period in 2014.

The data was reported by the National Development and Reform Commission.

The NDRC blamed “plunging demand for transportation of major commodities, including coal and metals” for the weak rail traffic numbers.

There was no real growth in rail volume even though China’s official GDP is reported to be growing.
http://www.mining.com/forget-slower-growth-worry-about-chinese-gdp-contraction/

Among the companies China’s Rescue Fund Is Buying to End the Stocks Rout

From Bloomberg, Aug 9, 2015

China Securities Finance Corp. has quickly become one of the most influential investors in the Chinese stock market, with $483 billion of firepower and the potential to add $322 billion

Here’s a look at some of the biggest CSF positions tracked by Bloomberg, all of which the agency has initiated or increased since June 30

They include rail

1) China Railway Group Ltd. * CSF’s holding: 10.4 billion yuan ($1.7 billion)

* Company description: One of China’s largest railway construction contractors

* Return since June 30: -2.1%

* Price-to-earnings ratio: 28

* Market capitalization: 275.1 billion yuan

2) China Railway Construction Corp. * CSF’s holding: 9.1 billion yuan

* Company description: Railway construction contractor

* Return since June 30: 7.2%

* Price-to-earnings ratio: 18

* Market capitalization: 211.7 billion yuan

To read the entire article, go to http://bloom.bg/1PeQ4e

Blue Skies in Beijing! All because Steel Mills Face Curbs as city prepares for a Parade

From Bloomberg, Jul 30, 2015

 

A Chinese paramilitary policeman stands guard at Tiananmen Square under crimson clouds at sunset in Beijing, China. Photographer: Feng Li/Getty Images

Beijing airport under clear skies

Steel output in China will be disrupted next month and September as mills around Beijing are ordered to curb production to ensure clean air and blue skies for a parade to mark World War II and sports event, hurting iron ore demand.

Look for more falling ore and met coal and scrap prices to follow as a result.

Steel output in China will be disrupted next month and September as mills around Beijing are ordered to curb production to ensure clean air and blue skies. Why? All for a parade to mark World War II and sports event. Impact Example As much as 6 million metric tons may be cut, more than was lost last year when similar curbs were used for a global summit…  says Xu Xiangchun, chief analyst at Mysteel Research. He was citing talks with policy makers and mills. The government plans measures to ensure the air quality, according to an official at the Beijing Municipal Environmental Protection Bureau.

IN THE LONG TERM

Over a longer period, the capital’s air pollution may drive the government more quickly towards far less polluting steel manufacturing processes.  Look for a shift towards more scrap charged oxygen plants and mini mills to substitute fro fully integrated ore and met coal steel plants.  This shift will affect railway traffic volumes both in China and in far away raw materials nations like Mongolia and South Africa.

To read the entire news report, go to http://bloom.bg/1IO3gHX

Asia’s Rising Economic Stars Lose Luster as China growth slows down

From Bloomberg, Jul 12, 2015

For years after the 2008 financial crisis, Asia’s rapidly expanding economies propped up global growth, with China clocking a pace of more than 9 percent, pulling along its neighbors. That is threatened now.

To read the entire article, go to http://bloom.bg/1TuNeEq

The report shows economic weaknesses across the Asia region, “from Indonesian borrowing needs to record Korean household debt and the bureaucratic and corruption hurdles in the Philippines that hold back its infrastructure projects.”

The required exports to feed the Asian growth is falling in nine among 12 main Asian economies, according to data compiled by Bloomberg. This Asian slump, which spans India to Malaysia and South Korea, is partly a consequence of China’s growth deceleration — to a growth estimated at 6.8 percent for last fiscal quarter… … But unlike the global slowdown in 2008-09 when Asia was primed to unleash stimulus, this time the region is saddled with debt.

This time they need a Plan B. Their rail and port projects justified in large part to support exports to China are now threatened as to rail feasibility. What do you hear?

Commodity Global Surpluses Persists — means weak demand for rail services

A Bloomberg report on Jul 8, 2015

The analysis of the demand for port and rail freight always begins with an examination of the market supply/demand at the buyers level. China and India are the major demand markets. But the long term surplus of supply means tough times ahead for suppliers in the emerging nations.

According to a Bloomberg report, the world is still mired in a surplus of most commodities, which means tough years ahead for prices and shipments of added materials. The actual source is from analysts at Goldman Sachs Group Inc. led by Jeff Currie.

“Long-term surpluses in most commodity markets require prices to remain lower for longer,” the Currie team wrote. The markets are contending with declining costs, a strengthening dollar and slowing growth in emerging economies like China that use a lot of raw materials, the bank said.

Patrick Pouyanne, the chief executive officer at French oil giant Total SA, told a parliamentary commission in Paris that the oversupply of oil will last into 2016. A sustained long term recovery this year isn’t likely, Societe Generale said in a report today.

Despite the long term slide in prices and the lowered market demand, most emerging nations have still not adjusted their strategic plans for rail,and port growth. Their current tactics seem to be “damn the torpedoes, and full speed ahead”. That kind of thinking over the past decade resulted in Greece’s economic headache.

Who will step up and change investment strategy first? Who is going to be that leader?

To read the entire article, go to http://bloom.bg/1Hbu7HR Sent from my iPad

IMF cuts global growth forecast again. Does it miss the real mark?

Focusing on the US GDP growth change!

Is that the right mark given other global changes this past month, like in China?

The IMF has cut its global growth forecast by blaming a slowdown in the US!  It has ored the market melt down signs in China!

Looks like a poor analysis to me as an economist.

The IMF now says the global economy will expand only by about 3.3% in 2015. It points out its lowered forecast for US growth to 2.5% in 2015 from an earlier estimate of 3.1%. But I believe that this may be a misplaced analysis by the IMF economists. China’s economic issues will have a greater impact then the US hiccups.

The IMF also beliefs that despite all of the hype around the Greece crisis… …the Greece crisis was having a only a marginal effect on the global economy.  That sounds true. IMF left its entire eurozone growth forecast for 2015 unchanged at 1.5%. It predicts that Germany will grow by 1.6%

INCREDIBLY… … the IMF has left its forecast for growth in China unchanged at 6.8%, despite the recent stock market volatility. It’s only comment about China is that: “The bubble has burst,” according to Olivier Blanchard, director of the Research Department at the IMF.

That is hardly an in depth analysis. What do you think?

There was no report cited by the BBC story as to changes in economic growth in South Africa, Brazil, Australia, or other sub markets that rely heavily upon selling resources to China.

See: http://www.bbc.com/news/uk-33464099 for more on their take of this news.

** Disclaimer ** The BBC always makes a point of saying that it is not responsible for the content of its e-mail, and anything written in its e-mail does not necessarily reflect the BBC’s views…

One expert sees possible Iron Ore Price drop into $30s range — This Year

From Bloomberg, Jul 8, 2015, 7:00 pm

The iron ore rout isn’t done yet… …”the raw material will extend declines into the $30s a metric ton this year”, according to Andy Xie, an independent economist…

To read the entire article, go to http://bloom.bg/1CpJtLZ

Steel demand in China is shrinking while iron ore supplies are still rising, says Xie, a former Asia-Pacific chief economist at Morgan Stanley. “China’s steel production is actually declining, that’s the reality,” Xie said…

“All the high-cost guys have to shut down for this market to stop falling. It’s not going to stabilize because Chinese demand is coming back, that’s not going to happen in the foreseeable future.” —————

This is another bad sign for mine and rail projects on the books to be built to add more ore and met coal supply that won’t be needed for quite a while.

Are you doing your due diligence strategic plan reviews?

Is China stock market intervention a loss of confidence?

From Bloomberg, Jul 8, 2015, 6:56 pm

Templeton Emerging Markets Group calls it an act of “desperation.” UBS Wealth Management labels it “extreme.” And Wells Fargo Funds Management says it just “postpones the inevitable.” What do you think?

Regardless, the drop in value marks a significant economic “hurt” for China. And a signal of tough times for those nations that depend on China for trade.

Are we paying attention? What is the strategic plan now? For all of us.

The old plans are trash.

To read the entire article, go to http://bloom.bg/1J5dUUQ

Excerpts include: “The (reported) measure can be effective in the short term because you are not going to allow people to trade,” said Jorge Mariscal.

As the record-breaking boom goes bust, President Xi Jinping is intervening in an attempt to prevent the rout from eroding confidence in his leadership. The moves have cast doubt on the Communist Party’s pledge less than two years ago to give market forces a bigger role in the economy, which is part of its largest reform drive since the 1990s.

China isn’t the only market with a history of state intervention. During the 1998 Asian financial crisis, Hong Kong bought shares worth $15 billion to prop up the market. In the U.S., the Securities and Exchange Commission temporarily banned short selling on some shares during the global financial crisis in 2008.

WHAT HAPPENS NEXT?

Supporting the droping stock market is going to put a crimp in the Chinese government plans to finance infrastructure in emerging nations.

Mid year 2015 iron ore outlook towards 2016

 

The global iron ore bear market deepened this week “on concern that low-cost production from Australia and Brazil will expand further while demand stumbles in China.”  That from sources including Bloomberg.

“Supply is now outpacing demand, pointing to renewed price pressure,” said Gordon Johnson, an analyst at Wolfe Research LLC in New York. Iron ore may collapse significantly below the $47-a-ton low that was set earlier this year, he said.

Ore with 62 percent content delivered to Qingdao fell to $49.60 a dry ton today)(Tuesday) according to Metal Bulletin Ltd.

NOT EVERONE HURT
Even as prices drop, Australia’s top producers will generate more than A$615 billion ($459 billion) in revenue in the 10 years to 2024, surpassing the previous decade’s total say some.

Notice that this current slump in prices validates previous ALERTS from sources like Goldman Sachs Group Inc. UBS Group AG and Citigroup Inc. that iron ore prices will drop to less than $40 a ton in the final three months Of this year.

BACK TO THE FUTURE, so to speak?

The six years of effort to recover from the 2007/08 global recession has so far lead us back to where we globally where economicly back then.