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China, Japan Tell Europe: “No Blank Check For You”

Forex-Master — Fri, 23 Sep 2011 22:49:02 +0000

Remember all those daily rumors (prmarily courtesy of the FT) that either China, or Japan, or Europe itself would bailout Europe (yeah, don’t ask). Well we can put them all to rest…for at least a few more hours. Because in the battle of inverse counter disinformation, it is important to refute the…
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Published: Sat, 24 Sep 2011 00:49

Yen rally weighed by SL, Fixing, China

Forex-Master — Wed, 08 Jun 2011 11:49:11 +0000

The Japanese Yen rallied a few hours ago with no apparent reason. Speculative selling pressure intensified after a series of stop-loss orders were triggered around 80 yen reports Reuters, while Forexlive suggests larger-than-usual fixing flows.

At last check, USD/JPY is still back under 80.00 aft…
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Published: Wed, 08 Jun 2011 13:49

Iron Ore Ships As Steel Shapes Up – US-FOREX.US

Forex-Publisher — Fri, 14 Aug 2009 23:50:18 +0000

Concerns about speculative buying continues to temper optimism regarding strengthening base metal prices as the market seeks to differentiate real metal demand from stockpiling and other conjectural buying. According to a recent report, one sector boasting solid demand is steel.Metal demand from China during the first half of the year bolstered steel demand, likely accounting for 60% to 85% of sales, estimates Tony Rizzuto, an analyst and managing director at Dahlman Rose & Co. He is one of the authors of the firm’s recent “Iron Ore, Steel and Dry Bulk Review” that highlights the Chinese government’s efforts to deflate speculative bubbles while maintaining steady growth by encouraging banks to lower lending. According to the review, steel and iron ore will continue to trend higher, supported by strong consumption. Automobile and construction industries account for the bulk of Chinese steel consumption. Auto sales have been rising in China as its economy grows even as the world remains in recession and in the U.S., thanks to the government’s Cash for Clunkers program. For a read on construction demand, report authors Rizzuto and Omar Nokta, an analyst and head of research at Dahlman Rose, looked to cement production. Cement is a good indication of rebar consumption and unlike most base metals, it isn’t easy to stockpile massive amounts of cement. Therefore, increased cement production indicates a pickup in construction activity and bolstered steel demand. Chinese steel trends suggest stronger iron ore consumption both from China and other global markets that have seen blast furnace restarts such as South Korea, Japan and Europe. Since these markets also depend on the seaborne market for iron ore, bulk dry freight demand is also strengthening. Rizzuto and Nokta estimate that China will import 518.4 metric tons of iron ore from the seaborne market, up from their prior projection for imports of 448.3 million tons. Companies poised to benefit from these trends, according to the report, include ArcelorMittal
, BHP Billiton
and Steel Dynamics
in metals and mining; and Diana Shipping
, Genco Shipping & Trading Limited
and Navios Maritime Holdings
in the dry bulk sector.

BHPs Upturn Plans – US-FOREX.US

Forex-Publisher — Wed, 12 Aug 2009 21:46:28 +0000

Cost consciousness is paying off at BHP Billiton. While the mining industry is still licking the wounds from an up to 90% tumble in some metal prices and faltering growth in commodity-gobbling China, the Anglo-Aussie company is keeping its eyes peeled for acquisition opportunities.
While investment in forthcoming projects would be its priority, “we do look at M&A opportunities,” Chief Executive Marius Kloppers told Forbes. Petroleum – a rapidly expanding and cheap to produce business for BHP – would be one of the areas that they’d consider, he added.
Profits at the Anglo-Australian firm fell during the year ending in June by 61%, but the fall was smaller than had been expected and there were a number of other positive signs. Topping the list for analysts was operating cash flow, the amount of cash generated from a company’s operations, and a closely watched measure of profitability. While the drop in commodity prices eroded cash flows at many mining companies-Switzerland’s Xstrata, for example, saw its first-half-year figure slide 73%-at BHP Billiton
, operating cash flow rose by 5.6% to 18.9 billion, suggesting that the firm’s cost-cutting strategy was having the desired effect. The company’s pretax, pre-interest profit margin came in at 40.6%, a decline from the year before but still well above the rest of the industry. “The numbers were very positive in our view,” says Gabor Vogel, an analyst at DZ Bank in Frankfurt who rates the stock as the “top pick” within the mining sector. “With these figures and having paid out a dividend [17% above last year], they are showing they have a certain financial strength,” he added. Shares of BHP Billiton rose 1.9% in London on Wednesday. One reason for investors’ lack of alacrity is that the firm is remaining cautious in its outlook. Kloppers told Forbes that the market won’t see clear sustained growth until the first quarter of next year. BHP has attributed part of the surge in demand for commodities earlier in the year to Chinese firms that were restocking supplies, but he has also warned that this is at its tail end. However, that economic weakness may end up being a blessing for BHP. The firm has been positioning itself at the bottom end of the cost curve, focusing on low-cost commodities and projects where there is more slack when selling prices tumble. For example, five of the seven projects completed in the past six months were petroleum projects, which cost it around 6 a barrel to produce. The firm has several billions’ worth of further petroleum projects in the pipeline too, along with aluminum, iron ore and coal. According to Charles Kernot, an analyst at Evolution Securities, the large number of low-cost projects such as iron ore and petroleum that came live during the period contributed to the cash flow rise. BHP’s cost control should also benefit from its plans announced in June to pool its iron ore operations in Australia with Rio Tinto
. That plan took shape after Rio Tinto, under pressure in Australia, ditched a proposed investment from Chinese aluminum producer, Chinalco. Since then, Rio’s relations with China have deteriorated rapidly: late on Tuesday, Chinese authorities finally arrested four employees for trade-secret infringement and bribery. BHP has been lying low in the dispute: During a conference call, Kloppers told investors the firm was monitoring the situation but operating as usual in China.

BHPReady For The Upturn – US-FOREX.US

Forex-Publisher — Wed, 12 Aug 2009 14:46:41 +0000

The past twelve months were never going to be pleasant for miners, with spot prices for metals falling by up to 90%, and commodity-gobbler China witnessing faltering economic growth this year, but all in all, BHP Billiton seems to have coped as well as it could have under the circumstances.Profits at the Anglo Australian firm fell during the year ending in June by 61%, but the fall was smaller than had been expected and there were a number of other positive signs. Topping the list for analysts was operating cash flow, the amount of cash generated from a companies’ operations, and a closely-watched measure of profitability. While the drop in commodity prices eroded cash flows at many mining companies – Switzerland’s Xstrata, for example, saw its first half-year figure slide 73% – at BHP Billiton, operating cash flow rose by 5.6% to 18.9 billion, suggesting that the firm’s cost cutting strategy was having the desired effect. The company’s pre-tax, pre-interest profit margin came in at 40.6%, a decline from the year before but still well above the rest of the industry. . “The numbers were very positive in our view,” says Gabor Vogel, an analyst at DZ Bank in Frankfurt who rates the stock as the “top pick” within the mining sector. “With these figures and having paid out a dividend [17% above last year] they are showing they have a certain financial strength,” he added. Shares of BHP Billiton
were up 0.5%, to 15.34 pounds , in London midday trading. One reason for investors’ lack of alacrity is that the firm is remaining cautious in its outlook. Marius Kloppers, chief executive of BHP, has attributed part of the surge in demand for commodities earlier in the year to Chinese firms that were re-stocking supplies, but he has also warned that that this is at its tail end. While North America and Europe may compensate somewhat, any assumption of a quick return to historical trend growth in the wider economy “may be premature,” the firm warned on Wednesday.However, that economic weakness may end up being a blessing for BHP. The firm has been positioning itself at the bottom end of the cost curve, focusing on low-cost commodities and projects where there is more slack when selling prices tumble. For example, the firm has spent 3 billion of a total capital expenditure of 4 billion on developing petroleum projects, which cost it around 6 a barrel to produce. The firm has several billions’ worth of further petroleum projects in the pipeline too, along with aluminum, iron ore and coal.
BHP’s cost control should also benefit from its plans announced in June to pool its iron ore operations in Australia with Rio Tinto. That plan took shape after Rio Tinto, under pressure in Australia, ditched a proposed investment from Chinese aluminum producer, Chinalco. Since then, Rio’s relations with China have deteriorated rapidly: late on Tuesday, Chinese authorities finally arrested four employees for trade secret infringement and bribery. BHP has been lying low in the dispute: during a conference call Kloppers told investors the firm was monitoring the situation but operating as usual in China.

China Fires The Next Volley – US-FOREX.US

Forex-Publisher — Wed, 12 Aug 2009 02:46:41 +0000

China fired another round in its ongoing trade dispute with Australia when it formally arrested four Rio Tinto employees it had accused of bribery and spying.
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The four employees were formally arrested on charges of infringing on trade secrets and paying bribes, China’s Xinhua News Agency reported Wednesday morning.
Three of the employees are Chinese and one is Australian citizen Stern Hu, who was born in China. Chinese authorities have held the four Rio Tinto
employees since July 5, when they were detained in Shanghai and accused of paying bribes to obtain steel industry secrets.
The arrests came during contentious negotiations between China and the miner on iron ore prices.
Australia and China have had an increasingly tense relationship since June, when Rio Tinto enraged and surprised China by pulling out of a deal to tie up with Chinese company Chinalco. Chinalco had agreed to pay 19.5 billion to buy much of Rio’s mining operations and convertible bonds.
Instead, Rio left Chinalco at the altar and embarked on a deal with archrival BHP Billiton
.

Chinas Recession Isnt Over July Statistics Show – US-FOREX.US

Forex-Publisher — Tue, 11 Aug 2009 06:46:20 +0000

TOKYO -
The green shoots that some economists see peeking up through the recession may not be bamboo just yet. China’s economy continues to suffer, a raft of economic figures released for July reveal, but Beijing’s enormous 585 billion stimulus program seems to be catalyzing spending at home. “With the global recovery unlikely to be smooth, domestic demand is likely to remain the primary engine of growth in the remainder of 2009,” Jing Ulrich, the chairman of China equities at Morgan Stanley, wrote in a research note. China’s explosive growth, as in much of Asia, has been a story about exports. But with the recession making it harder for Chinese companies to sell their goods to cash-strapped foreign buyers, the central government needed to pump money back into the economy to encourage both consumers and Chinese companies to spend more.As a result, fixed asset investment levels increased 32.9% in July as infrastructure projects boomed. The effort to boost spending continues: Ulrich noted that the country’s Vice Minister of Commerce recently said China might slash duties on luxury goods, which could lure spending away from duty-free meccas like Hong Kong.
July’s results show a mixed scorecard for the Chinese economy.
Industrial production, the engine of the country’s growth, has risen 10.8% so far in 2009, which set a nine-month record but came in below analysts’ estimates. Monthly exports also rose in July, although they remained 23% below last year’s levels. Although both the consumer and producer price indices declined in July for the sixth and eighth straight month respectively, economists are worried more about inflation than deflation as the recovery ramps up. The market for A-shares is up 95% this year and housing prices are climbing again. Steel prices have been rising since October and are expected to continue to rise over the next two months, while retail sales have risen 15.2% so far this year.
Reuters contributed reporting to this article.

Greedy Bankers Or Greedy Clients – US-FOREX.US

Forex-Publisher — Tue, 11 Aug 2009 03:46:19 +0000

China is the kind of place where wealth can be made quickly. It is also where it can be lost overnight if you happen to be using the services of private bankers provided by some world-renowned international banks.
This is the bitter lesson that Jacky Jin, a founder of a small internet company in Shanghai and a group of more than 20 fellow mainland Chinese millionaires learned, to great financial distress.
These investors are coming forward to expose what they say are fraudulent schemes employed by their private bankers at several Hong Kong-based international banks. The investors, who claim to be financially unsophisticated, say their bankers peddled high-risk equity derivatives called accumulators to them.
When the risky investments went bad, the investors lost a collective 600 million Hong Kong dollars .
They aren’t the only ones stung by losses from accumulators sold by Hong Kong bankers during the boom times. Accumulators claimed two high-flying causalities among China’s ultra-rich through the companies they controlled, and also hit several Hong Kong tycoons.
Larry Yung, ranked by Forbes as the richest man in China back in 2005, lost his chairman title in April, following the jarring disclosure last October that CITIC Pacific, the company in which he owned a big stake, had lost 14.7 billion Hong Kong dollars betting on accumulators.
Then there was 27-year-old Yang Huiyan, China’s third-richest on the Forbes 2008 ranking. Her fortune was dented after Country Garden, the family’s Hong Kong-listed property unit in which she holds a 60% stake, revealed in its latest annual report in April that it had a paper loss of 1.24 billion yuan in an accumulator sold by Merrill Lynch.
China’s rich aren’t the only ones who lost their shirts. Hong Kong’s Next magazine in November reported that a group of Hong Kong tycoons lost billions betting on accumulators. The tycoons include Robert Kuok, patriarch of Kerry Holdings; Joseph Lau, chairman of Chinese Estates Holdings; Lee Shau-kee, of Henderson Land; and Thomas Wu Man-san, chairman of Hopewell Holdings
.
Jin estimates there are more than a thousand mainland victims in China and hopes that his Chinese-language website can be used as a rallying point for them to connect and organize collective action.
Jin’s group includes lawyers, small entrepreneurs, real estate developers and retirees. Top among them is a Beijing-based trader who not only lost HK 175 million but also is being sued in Beijing by his bank, the Hong Kong office of Singapore’s DBS Bank, for part of the loss he could not honor.
“The key of these disputes lies in the way banks sold their products. It’s misleading, unethical, and fraudulent,” says Jin, “We deposited our money with an international banks in Hong Kong because we trusted Hong Kong and the banks’ reputation, their image, the first-class services.”
Jin himself said he lost HK10 million through a ten-minute phone call with his banker at HSBC
during which he agreed to buy one lot of “discounted stock,” in Aluminum Corporation of China
, known as Chalco.
HSBC spokeswoman Laine Santana said the bank does not comment on specific cases.
Jin founded a group called Victims of Hong Kong Banking Services in July after they found each other through anecdotal reports mentioned in Chinese media in recent months. He described their experiences as driving on a highway riddled with big holes ahead without any roadside warnings.
With the absence of class-action lawsuits in Hong Kong and China, these investors are pursuing their banks on their own, while at the same time being pursued by their banks for the losses incurred.
One investor filed a case with the Beijing police against Barclays
. Another has initiated legal action in Hong Kong against Hang Seng Bank, a HSBC-affiliated bank. But legal action is infamously costly in Hong Kong: one of them has racked up HK 1 million in legal fees before the first hearing has been scheduled.
So the Chinese investors are stitching up plans to take their banks, also including CITI, ABN Amro
, DBS, and CSFB, to mainland Chinese courts, where legal fees are less expensive. Jin travelled to Hong Kong earlier this month with five investors for a meeting with officials at the Hong Kong Monetary Authority, after a nearly year-long impasse with Hong Kong’s de-facto central bank.
Hong Kong securities regulators have estimated US23 billion worth of accumulators contracts were sold in Hong Kong, still China’s preeminent financial center, but exactly how much wealth was wiped out was difficult to gauge because accumulators are structured as private contracts.
But this much is sure: the shine of international private bankers has definitely come off in the eyes of many Chinese millionaires.

China Where Poisoning People Is Almost Free – US-FOREX.US

Forex-Publisher — Fri, 07 Aug 2009 10:46:19 +0000

HONG KONG -
In addition to its cheap labor costs, China has another comparative advantage as the world’s factory: Companies often pay almost nothing to pollute China’s air, water and soil and to poison its people.Need pliant workers to handle toxic chemicals? Wages are just 2.60 a day. If the chemicals contaminate a town? Compensating a family of five costs just 732. Local water supply contamination makes 4,000 people vomit? That’s just 7 per household. Cost of bribing local Chinese officials to look the other way rather than adhering to safety standards? Well, that’s unknown, but given the frequency of China’s pollution atrocities, apparently it is cost-effective.While companies can get away with pollution atrocities for years, the Chinese government, in the long run, may have to pay a high price for allowing it: political instability triggered by the unanswered grievances of pollution victims.
Ammonia Leak in Inner Mongolia
In the past few weeks, local officials in Hunan Province and Inner Mongolia have been busy trying to control public anger after a spate of serious pollution incidents. In the latest one, 246 people – factory workers, emergency rescuers and nearby residents – were sickened Wednesday morning by an ammonia gas leak at a pharmaceutical plant in north China’s Inner Mongolia Autonomous Region.
Liquid ammonia spilled when a pipe suddenly burst while a truck was unloading 30 tonnes of liquid ammonia at the Chifeng Pharmaceutical Group factory. The Inner Mongolia government ordered people living downwind within 2 kilometers of the leak to evacuate, and the local public security, environmental protection and work safety authorities set up a team to investigate the accident, said China Daily.
An initial investigation blamed old pipes, the failure of emergency valves in the ammonia tanker, and the overloaded truck, as major reasons for the leak, Xinhua reported Thursday afternoon.
Ammonia, which widely used as a household cleaner, is a corrosive substance. People exposed to very high levels of ammonia would have their skin, eyes, throat or lungs severely burned, according to the Agency for Toxic Substances and Disease Registry, a federal public health agency under the U.S. Department of Health and Human Services.
Sewage in the Water Supply
Residents of Chifeng, a run-down mining city in Inner Mongolia where the ammonia leak occurred, had just recovered from another environmental disaster only two weeks before: thousands were sickened when local water supplies were contaminated. More than 4,300 Chifeng citizens fell sick with diarrhea, vomiting, and fever after drinking tap water. The city’s water supply has yet to be fully restored.
Local officials explained the water was contaminated after heavy rains on July 23 caused a power outage at a sewage pump station. That allowed raw sewage to flood into the well that supplies tap water to most of the city, various local media reported.
Chifeng citizens could have avoided the danger if they had been notified immediately about the incident. Instead, the local authorities stalled. They didn’t alert the public for two days.
After the dirty water sickened the city, two senior officials, including the director of the Chifeng municipal construction commission and his deputy, were sacked. The state-owned water supply company agreed to pay 50 yuan in compensation to each household.
Metals Contamination in Hunan Province
Meanwhile, in the central province of Hunan, desperate citizens in Liuyang City have been trying to take to the streets again this week to protest unsafe operations at a government-protected factory. The pollution has already killed at least five people and poisoned another 500 with toxic pollution from cadmium and indium, metals used at the local factory.About a thousand villagers from Shuangqiao, Jiankou and Puhua villages besieged a police station and city government headquarters last week to complain that the local government had failed to protect them from the deadly pollution. This week, they didn’t get the chance to protest. Instead, tens of thousands of police officers were deployed to seal off major government buildings in Liuyang to prevent another riot. At least eight journalists who tried to interview villagers or take photos of the factory were detained, and told they could relay on the government to give them all the information they needed, according to the South China Morning Post.
Residents blame the Xianghe chemical plant, which had been illegally producing indium, a metal mostly used to produce thin-film coatings for lamps and for liquid crystal displays in flat-panel video screens. Last week, the riot drew publicity, forcing the government to shut down the illicit plant. The factory opened in 2004. Workers there were paid 18 yuan a day – about the cost of a McDonald’s Happy Meal – to produce the highly toxic chemicals used to make flat-screen TVs which sell for more than a year’s salary.Indium compounds are highly toxic, and can damage the heart, kidney, liver or embryos of those exposed to it.Cadmium causes short-term lung damage in humans who are exposed to it through inhalation. Prolonged exposure to cadmium causes chronic kidney disease. The U.S. Environmental Protection Agency says exposure to cadmium probably causes cancer too.
China is the biggest producer of indium, contributing over 40% of the global supply. Indium prices averaged about 685 per kilogram in 2008, down from a peak of 946 a kilo in 2005, based on the estimates by United States Geological Survey, which forecast a supply deficit for indium for at least another year.
High indium prices gave Xianghe an incentive to produce it illegally, probably with the cooperation of corrupt officials. A former Xianghe worker told the South China Morning Post that local environmental inspectors visited from time to time, but management was always alerted ahead of time.The factory and the local government tried to placate residents by providing a free medical check-up for 2,888 residents living within a 1.2 kilometre radius of the factory, and compensation of about 5,000 yuan for a family of five, according to a report by AFP.After the medical checks showed abnormally high concentrations of cadmium and indium in nearly a fifth of area residents, local officials could no longer deny that Xianghe had discharged untreated life-threatening pollution. Last month, several villagers died, and autopsies showed their bodies contained massive amounts of indium. Those who had been poisoned demanded free medical treatment, and untested residents who lived further from the factory demanded the government provide medical tests. After authorities sent sick villagers back home, protesters rioted last week.The tension between citizens and the government is increasing, and thousands of police are monitoring villagers in an effort to prevent further riots.
A Plea From Environmentalists
Meanwhile, two environmental advocates aren’t just counting on the Chinese government to stop pollution. They are taking a different approach, trying to publicly shame Western firms buying from Chinese polluters.Green groups Friends of Nature and the Institute of Public and Environmental Affairs called on Timberland to monitor two Chinese suppliers the non-profits say have repeatedly breached China’s pollution limits. The two Timberland suppliers are Shanghai Richina Leather, which has been fined by pollution watchdogs since 2004 for producing emissions higher than the legal limits, and Falcon Tannery in Guangdong, which violated water pollution limits for three years, according to the South China Morning Post.

Chinas Largesse Helps Lenovo – US-FOREX.US

Forex-Publisher — Thu, 06 Aug 2009 06:46:12 +0000

HONG KONG -
Because half of the low-priced computers sold in China’s rural areas carried Lenovo’s label, the world’s fourth-largest computer maker managed to trim its losses in the quarter ending in June.
Lenovo
reported Thursday a net loss of 16 million for the three months through June, down from a profit of 110.5 million from the same period last year. The figure, the company’s third straight quarterly loss, was better than the market forecast of a 54 million loss, and was better than the previous quarter’s 264 million loss. Total revenue dropped 18% to 3.5 billion during the quarter from 4.2 billion in the previous year, as the average sales price continued falling. But the lower prices helped Lenovo increase unit sales and grow its market share in China. The computer maker said it was under severe pricing pressure from cut-throat competition amidst weak market demand. Lenovo had been relying on big orders from corporate clients since it acquired its laptop unit from IBM
in 2004. But with corporate sales falling as companies cut IT budgets, Lenovo shifted strategies, and has been focusing on individual clients in China and other emerging markets after a restructuring in April.
To carry out its expansion in China, Lenovo in February said good-bye to its well-regarded American CEO Bill Amelio, a former Dell
executive who led a broad restructuring of Lenovo’s worldwide operations. His replacement was Yang Yuanqing.
Thanks to the restructuring and the new business strategy, China was the only area that contributed positive earnings to the group’s consolidated account in the April-June quarter. The Chinese market accounted for approximately 48% of Lenovo’s group sales, and the personal computer market in China posted 14% year-on-year growth during the quarter, Lenovo announced Thursday. Lenovo’s unit shipments to China grew 15% in the quarter and its market share rose by 0.3 percentage points to about 28.6% based on industry estimates. Lenovo is the top seller in China. Lenovo’s growth in China was helped by the Chinese government’s stimulus package. In early January, the central government revealed details of its 4 trillion yuan hand-out. Under a subsidy program aimed at boosting consumption in rural districts, the government rolled out a 13% subsidy for farmers in 12 provinces who buy home appliances such as TVs, refrigerators and personal computers. Lenovo has been the biggest beneficiary of the four authorized computer brands entitled to the subsidies. According to a market survey, almost half of all computers sold to rural farmers in the first six months of this year were from Lenovo. Even though the worldwide personal computer market showed signs of improvement, Lenovo forecast the operating environment would continue to be challenging for the 2009/2010 fiscal year because the global economy remains uncertain and corporate customers are still conservative about PC spending. “In addition, the ongoing shift of product mix toward entry-level PCs also exerts pressure on Lenovo’s operation,” Lenovo said in a statement. The Chinese computer maker pledged to continue to invest in the China market to further expand its leadership and profitability. “The market offers good growth opportunities for the Group with the government’s economic stimulus program, rural PC subsidy program, urban PC upgrade program, 3G adoption, etc. The Group will enhance its distribution network to cater for these new growth drivers,” it added.
Thomson Reuters contributed to this article.