Will China come to the rescue? ::Macquarie Research,

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Will China come to the rescue?
Feature article
 We summarize apparent demand commodities to July 2011, highlighting
relatively strong growth year-to-date in most of them (except met coal, iron
ore and zinc). We highlight the inverse relationship between Chinese and
non-Chinese demand and speculate that weaker non-Chinese demand
growth in 2012 may well be accompanied by a surge in Chinese growth.
Latest news
 Monday was another down day for base metals on the LME, as further growth
fears impacted global markets. Nickel took the biggest hit, down 2.8% on the
day to close below $21,000/t for only the second time this year. All other
major base metals also dropped over 1%, while WTI oil dipped 4%. The China
services PMI was the day’s weak data point, falling to a record-low of 50.6;
the slowest pace of tertiary business growth in the survey's six-year history.
 Gold rose towards a new nominal high, reaching $1,895/oz on the PM fix and
moving over $1900/oz in Comex trading. Gold is also again trading at
a premium to platinum, with the Pt:Au ratio dropping to 0.987. While we
wouldn’t rule out gold moving higher, we think that longer term gains should
require a drop in the US$, which has been fairly steady since markets turned
down. For more details, see the latest instalment of the Precious Pulse.
 Freeport McMoRan Copper & Gold's Indonesia mine workers have
announced plans to strike indefinitely from September 15 unless the company
meets their pay rise demands, Reuters reports. The strike would be the
second since July at Grasberg, the world's third biggest copper mine.
Meanwhile, workers at Freeport's Cerro Verde copper mine in Peru also plan
to hold a two day strike on 7th and 8th September in a push for improved pay
and conditions. The mine produced ~312,000t of copper contained in 2010.
 Jinchuan Group, China's top nickel producer and third-biggest copper
producer, is to invest in two laterite mines on Palawan Island in the
Philippines after signing agreements with two companies last week.
 BHP Billiton has for a fifth time rolled over its monthly reference price for
manganese ore shipments from September to October, leaving benchmark
Gemco lump ore unchanged at $5.50/dmtu CIF China. Mn ore prices had
fallen sharply through the second half of last year and early 2011 - BHPB's
October reference price is 21% below the same month of last year - but prices
appear to have stabilised as high stocks start to be drawn down. Chinese Mn
ore port stocks fell by 3% MoM to 3.85mt (gross weight wet basis) in July,
according to the latest data from the IMnI. Crude steel production remains
strong and, as the stock draw continues, we would anticipate prices for Mn
ore to start moving up.
 The spectre of further production losses is again rearing its head in the met
coal space. McCloskey’s has reported that unions at BHP-Mitsubishi
Alliance’s met coal operations in Queensland are planning to start 24-hour
stoppages simultaneously at 7 mines in the regions. Until now, stoppages
had mainly been limited to 12 hour blocks. Meanwhile, a roof fall at
Peabody’s North Goonyella mine looks set to cause at least 4 weeks of output
losses, equating to ~200kt of met coal.