The well publicised problems in Greece and Chinese slowdown continue to have a negative effect on all financial markets. The upside of the turmoil is falling Australian dollar which should help local manufacturers and exporters.
**** China’s Towering Metal Stockpiles Cast Economic Shadow By: Reuters 20 May 2012 ****
When metals warehouses in top consumer China are so full that workers start stockpiling iron ore in granaries and copper in car parks, you know the global economy could be in trouble.
At Qingdao Port, home to one of China’s largest iron ore terminals, hundreds of mounds of iron ore, each as tall as a three-storey building, spill over into an area signposted “grains storage” and almost to the street.
Further south, some bonded warehouses in Shanghai are using carparks to store swollen copper stockpiles — another unusual phenomenon that bodes ill for global metal prices and raises questions about China’s ability to sustain its economic growth as the rest of the world falters.
**** Chinese buyers default on coal, iron ore shipments-trade ****
SHANGHAI/SINGAPORE, May 21 (Reuters) – Chinese buyers are deferring delivery or have defaulted on coal and iron ore deliveries following a drop in prices, traders said, providing more evidence that a slowdown in the world’s second-largest economy is hitting its appetite for commodities.
China is the world’s biggest consumer of iron ore, coal and other base metals, but recent data has shown the economy cooling more quickly than expected, with industrial output growth slowing sharply in April and fixed asset investment, a key driver of the economy, hitting its lowest in nearly a decade.
Coal and iron ore prices could fall further before recovering towards the tail end of the second quarter, traders say, sparking more defaults or deferred deliveries.
“There are a few distressed cargoes but no one is gung-ho enough to take them. Chinese utilities aren’t buying because they have a lot of coal and traders are also afraid of getting burnt. It’s very bearish now,” said a trader.
At least six defaulted thermal coal cargoes were being re-offered at a discount, traders said, including contracts for shipments from the United States, Colombia and South Africa.
**** Greece’s economy in facts and figures ****
Basic economic figures for Greece, (the epicenter of the Eurozone debt crisis). The first member state to be bailed out by the European Union and the International Monetary Fund, in May 2010.
1. Greece joined the eurozone as its 12th member state on January 1, 2001, a year before notes and coins went into circulation.
2. Greece has highest debt ratio in the bloc, owing more than 350 billion Euros, and exceeds by far the eurozone limit of 60 percent of GDP.
3. The annual public deficit — the shortfall between revenues and spending — was 10.6 percent in 2010. Government officials put it at 9.6 percent of GDP in 2011.
4. Gross Domestic Product: 227.3 billion Euros in 2010
5. The economy shrank 4.5 percent in 2010, and is estimated to have contracted by more than 5.5 percent this year.
6. The Greek economy is small, accounting for less than 3.0 percent of total eurozone economic output.
7. Inflation: 4.7 percent in 2010, 2.8 percent in 2011 and 0.6 percent in 2012 (2012 budget).
8. Unemployment hit 16.3 percent at the end of the second quarter this year and is expected to come in at 15.4 percent for the full-year, rising then to 17.1 percent in 2012.
9. Standard and Poor’s rates Greece at “CC”, almost equivalent to default.
10. Population is 10.78 million, down from 11.28 million in 2009, according to the latest official figures in May, as migrants leave due to the economic downturn and birth rates remain low.
11. Parliamentary democracy with 300 deputies elected for four years, forming a government.