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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (24395)	2/25/2005 12:08:04 PM
From: RealMuLan	Read Replies (1) \| Respond to of 116555

Under this kind of price, plenty assembly lines in China will close soon, although they do not count that much share of China's GDP, so that won't mean China's economy will collapse. But it will definitely mean much lower demand for steel, thus iron ore. That is what I mean by "break" For one example, a company in ShunDe, GuangDong Province, make OEM microwaves for 40+ international manufactures, and produces 70+% of all microwaves in the world. Due to the price increase in raw materials last year and not being able to pass on higher cost to customers, their profit margin has been down from 5% range to 0.5% range. They will close soon if the raw material price increases further. And there are some other similar type of factories for air conditioners, refrigerators... Market for household appliances everywhere is saturated. Poor people who want them cannot afford, and rich people have several of each kind already. China does not make much money on these kind of assembling, so the effect on China's economy is not fatal.