An interest rate hike may have ZERO affect on commodities
exactly...
the great sucking sound you hear is china buying raw materials, raising rates in the US will have no effect on a demand driven price spike in commodities in china.
story.news.yahoo.com
China's November industrial output surges 17.9 percent
Wed Dec 10, 3:23 AM ET
BEIJING, (AFP) - China's industrial output growth continued at a heady clip in November, reflecting an ongoing investment-led boom in the auto and steel sectors while the immediate outlook is for only a modest slowdown.
Output soared 17.9 percent to 396.6 billion yuan (48 billion dollars) in November, its second highest monthly rise this year, data showed Wednesday.
The National Bureau of Statistics claimed November was the highest monthly growth rate this year athough previously released figures indicate that February's 19.8 percent jump was higher.
By comparison, the October growth rate was 17.2 percent, while output in September rose 16.3 percent.
November's increase was fuelled by telecoms equipment, transportation equipment, metallurgy and electronic machinery production, which contributed 46.9 percent of total growth.
Analysts said that investment-led factory production in key industries such as autos and steel drove output growth higher despite warnings of overcapacity and signs of rising inventories.
"Strong industrial output, especially steel production, was backed by solid domestic demand because investment growth is moving at a high speed," said China Securities economist Zhu Jianfang.
Auto production, a key pillar of China's current economic boom, rebounded slightly from a slowdown in October, with output up 32.7 percent year-on-year at 410,960 units.
This was an improvement from the 21.4 percent recorded in October but below September's 36.8 percent, the National Bureau of Statistics said.
China's booming auto and construction industries have been largelly responsible for the country's massive yet quickly expanding steel industry.
In November, steel and steel sheet output rose 23.3 percent and 28.3 percent respectively year-on-year, as steel output topped 200 million tonnes in the first 11 months, making China the first country to produce so much on an annual basis, the bureau said.
Analysts said that renewed strength in China's export markets was also driving factory production.
Coming just a day after the government said that exports grew 32.9 percent in the first 11 months, Morgan Stanley chief China economist Andy Xie said that the key to the outlook lies with the United States, where the economy expanded at a hefty 8.2 percent in the third quarter.
"If the US economy holds, export (growth) will still be double-digit but slower than 30 percent. The key is that the US holds up," Xie said.
Light industry output in November picked up 16.7 percent to 143.3 billion yuan, higher than October's 15.3 percent, while heavy industry jumped 18.6 percent to 253.3 billion yuan, 0.2 percentage points higher than October.
However, output growth is not expected to continue at the same pace in the new year, said Zhu, who predicted a slowdown to between 16 and 17 percent in December.
An easing might also come from manufacturers crimping exports in the new year, when a cut in the tax rebate regime kicks in.
Other analysts warned that a slowdown could be forced on the industrial sector if the flood of money pouring into overheated segments shows few signs of letting up.
"The next step is whether the over-investment we've seen in the past continues," said Citigroup economist Huang Yiping. "If it does then that's bad news."
In the energy sector coal output last month rose 20.9 percent to 122 million tonnes, up from 20.2 percent in October, as mining groups worked to boost supply to combat a coal shortage at power stations.
Although electricity output jumped 15.6 percent, shortages continued to hound many parts of the country.
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quickstart.clari.net
b>Chinese demand boom propelling commodity prices ever higher
Sunday, 02-Nov-2003 9:40AM PST Story from AFP / Perrine Faye
Copyright 2003 by Agence France-Presse (via ClariNet)
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LONDON, Nov 2 (AFP) - A rapid rise in many commodity prices over recent months is primarily down to one factor, experts say: the seemingly insatiable appetite for raw materials from China's swiftly expanding economy.
"Chinese influence is tremendously strong -- it is a key factor in all the commodities at the moment," is the verdict of Barclays Capital analyst Kevin Norrish.
China's recovery from the economic stumble caused by the spread of the SARS respiratory virus earlier this year had been "dramatic," he noted.
With gross domestic product growth in the third quarter hitting 9.1 percent, China's government predicted last month that the country's economy would expand by 8.3 percent during 2003, against an initial estimate of 7.0 percent.
And while many western economists urge caution on the accuracy of Chinese economic data, many now think that any current misreporting is likely to be on the downside, meaning that the actual growth rate could be as high as 10 percent.
It was plain that consumption in the world's most populous nation was "rocketing", said a broker with the Fimat company, speaking anonymously.
"China is stepping up very rapidly in buying pretty much everything you have available in the market," he said.
China's industrial sector has in particular been sucking up vast amounts of base metals, with demand for copper and nickel expected to increase 10 percent during 2004, and lead, zinc and aluminium imports also soaring.
An effect has also been felt in the precious metals sector, where global platinum prices recently topped 750 dollars an ounce for the first time in 23 years.
"The region of strong growth has been China, where demand for platinum is increasing every year despite the price rises," said analyst Jeremy Coombes from precious metals specialists Johnson Matthey.
The picture is the same for the cereals market, where this week China bought a million tonnes of soya beans from US growers, following other orders.
China's cotton purchases have also been ratcheted up in the wake of recent domestic production woes due to heavy rainstorms, pushing global prices to five-year highs.
Additionally, China's imports of crude oil are 25 percent ahead of last year, and the country is now also by far the biggest global consumer of rubber.
The effect of all these deliveries to China has also helped push a massive rise in the cost of sea freight, said Norrish.
London's Baltic Dry Index, which measures the global price of bulk transportation -- for example of cereals and minerals -- has risen 62 percent in a month and doubled since the end of August.
After decades of tight state control, China's economy has been gradually loosened over the past two decades to the extent that in most industries, a de facto capitalist system exists in what is still officially a communist nation.
Expansion has been fuelled by a swift rise in wealth within the country's population of 1.3 billion, although this has largely been confined to urban areas.
SARS, which began in south China late last year and killed 349 people in China, almost half the global toll, dealt a massive blow to business confidence.
However the subsequent recovery had surpassed expectations, said Barclays Capital's Norrish.
"Certainly people expected to see China's raw material imports to continue to grow this year, but what surprised people is the strength of it and the way it has accelerated over last year's levels," he said. |
