I sold a lot of stock this last week. I sold completely out of my positions in Taseko and Quadra, and I reduced my positions in Grande Cache, Western Canadian Coal, and Teck by half.  The move has been straight up for these stocks, and the fundamentals of the economy, while improving, are still too weak in my opinion to justify  further price increases.

With these trades I now have a cash position of 35%.  That is the most cash I have had since September of last year.  I'm not one of these bearish sorts who believes that the apocolypse is nigh, but I do think that 1,000 on the S&P is a little stretched when the consumer is still spending less and less each month.  While I am still of the mind to believe the leading indicators, which continue to point to a recovery, I would like to see some evidence soon, and until that time I am reluctant to bet too heavily.

I have been particularly concerned about copper.  It was that concern which led me to liquidate all of my TKO and QUA stock.  There is a lot of research on copper in the blog bytes below.  I spent time trying to determine just what has been driving the price of copper over the past 6 months.  Obviously it was China, but the argument among bullish and bearish analysts since march has been how much of China's demand for copper has been from re-stocking, and how much has been from a genuine pick-up in activity. 

Well, after studying the situation over the week I came to the conclusion that there has been a third factor at play that may have been an even more important driver then re-stocking or demand.  Scrap.  Scrap copper imports into China fell off the cliff over the first half of the year, and if you look at the numbers, the declines in scrap have matched extremely well to the increases in refined copper imports.

If scrap is truly the marginal supply, there is both good and bad to the story.  The good is that it puts a floor under the price of copper.  From what I have read, there isn't agreement on what price scrap becomes worth scrapping, but it is clear from China's recent imports that the price is north of $2.20/lbs.  The bad news is that imports of scrap into China in July suggest that a sizable amount is now being procured.  I suspect that this is going to limit the gains from copper going forward, and with the official restocking of the Chinese government complete, that copper prices may work lower.  At any rate, Taseko, Quadra and the other copper names have had solid moves since mid-July, and taking a +50% gain in a month, with the above concerns weighing, seemed prudent.

The metallurgical coal story is less clear.  There is no doubt that coal prices continue to rise.  The $160/t number in one of my article clips below was confirmed by Western Canadian Coal on friday.  How high met coal will rise is anyone's guess.  Still, the fact remains that these companies are locked in at $120/t until next March, and that in the case of WTN and GCE, the stocks have more then doubled in the last month.  Again, I took some money and ran.

I've also been spending more time researching oil and oil companies.  I finished reading Twilight in the Desert over the weekend (for the second time) and I came away more convinced then ever that peak oil is real, but that it is more likely to sneak up on us like boiling water on a frog then it is to burn us in a blinding flash.  So while I look at the oil stocks being overbought in the same way I do right now with the metals and the coals, I just feel more comfortable believing in $70 oil then I do $3 copper at this point in the cycle. 

In particular, I've been watching some of the Bakken plays closely but have only pulled the trigger in a small way so far.  I bought a tiny amount of Brigham Petroleum in the mid 5's, but it unfortunately ran up $2 on news of a 2,000bbl/d well (with 22 frac's!!!) before I could add anything substantial to the position.  With oil running back down into the $60's on friday, I am hoping for a wash out in both the price of oil and the price of the stocks, at which point I would add substantially to a position in BEXP.

Anyways, while I hunker down a little and wait for a pullback to take on more opportunities, here are some datapoints and comments to ponder in this week's bytes:


Shipping
  • Rates are declining as Chinese steelmakers delay imports while they negotiate annual iron ore prices with producers such as Rio Tinto Group, BHP Billiton Ltd. and Vale SA, Durrell said. “I don’t think they will come back until they agree,” he said...The drop reflects a wider slide in demand for raw materials that will likely push prices for metals, commodities and energy lower, Eugen Weinberg, a senior commodity analyst at Commerzbank AG in Frankfurt, said by phone yesterday...Chinese have backed off and it’s starting to show in the number of shipments this month,” Gavin Durrell, a Cape Town-based official at Island View Shipping SA, Africa’s biggest commodities shipping line, said by phone today. “Iron ore and coal seem to be slowing down.”- Bloomberg Aug 10
  • Latest information from China's iron ore ports is that 47 Capsize vessels are waiting, as opposed to 88 vessels in mid-June - SSY Aug 11
  • Imports in June were 126m tonnes compared with 70.5m tonnes at November 2008’s nadir. That trend continued in July with iron ore imports alone rising a further 5% over June to 58m tonnes...The London broker points out that this is not just a continuation of the Chinese growing imports story, but is roughly 33% above the trend line. Some 40% of the trade increase in the first half of this year came from iron ore imports, and 25%, usefully from a drybulk owner’s point of view, from coal. - SeatradeAsia.com Aug 13

Oil
  • China bought record volumes of oil and iron ore in July as automakers, steel producers and builders expanded output to meet rising demand driven by the nation's $586 billion stimulus spending. Oil imports jumped 18 percent to 19.6 million metric tons, and iron ore purchases rose 5 percent to 58.1 million tons from a month ago, the Beijing-based customs said today in a statement on its Web site. - UBS Aug 11

  • Data released Tuesday from the Organization of Petroleum Exporting Countries showed output from the cartel's 11 members bound by production quotas rose by 105,000 barrels a day last month despite the group keeping in place formal production cuts announced late last year. It was the fourth consecutive month of increased output. Since April, output is up 420,000 barrels a day, or almost 2%...Adding to the OPEC crude hitting the market, Iraq is pumping 6% more oil since April and the country's exports in July rose to a little more than two million barrels a day to the highest level since the U.S.-led invasion in 2003. - WSJ Aug 11

  • Analysts with ICAP Shipping in London said that 29 tankers were being used to store crude oil worldwide as of last Friday, up from 26 a week earlier, and 24 on July 24...Ten very large crude carriers, or VLCCs, were used to store oil offshore in the U.S Gulf of Mexico, 10 in Northwest Europe, seven in west Africa, one in the Mediterranean and one in the Far East, the ICAP analysts said. Each VLCC can hold about 2 million barrels..."We have seen more interest in people chartering VLCCs for storage in the last couple of weeks," said Simon Chattrabhuti, head of tanker research at ICAP Shipping.- Dow Jones Aug 12

  • The U.S. oil product market has shifted from a gasoline/distillate imbalance to a supply glut of both gasoline and middle distillates. U.S. supplies of distillate, including heating oil and diesel, are at a 24-year high. (Fig. 1) There are also an estimated 85 million barrels of oil product sitting in floating storage alone, with much of it along the Gulf Coast. - Dian Chu Aug 11
  • Refiners have invested in capacity additions after a continuous spell of demand outpacing supply, and those capacity additions are about to come on line. The considerable amount of refining capacity under development could further reduce refinery margins from current levels. Spare capacity, which was as high as 25% in the early 1980s, has declined to about 6-7% in recent years. The announced projects, if realized, would create a capacity cushion of around 20%. Merrill Lynch estimates global demand for petroleum products to fall 5.2 mn b/d below capacity this year. - Dian Chu Aug 11
  • The International Energy Agency on Wednesday raised its forecasts for global oil demand this year and next, citing stronger energy appetite in Asian economies, particularly China...The Paris-based agency added 70,000 barrels a day to its 2010 forecast of global oil demand. The new prediction of 85.3 million barrels a day is a 1.6 per cent increase over this year...In its closely-watched monthly survey, the IEA also increased its 2009 forecast by 190,000 barrels a day to 83.9 million barrels a day, but noted this is still 2.7 per cent lower than 2008. - Associated Press Aug 11
  • Although Canadian Service equities enjoyed yet another strong week, Canadian rig counts remain stubbornly low at levels typically observed only during spring break-up when poor road conditions prevent the movement of heavy equipment. Throughout the last five years, utilization during spring break-up has averaged roughly 25%. Since rebounding from single-digit lows in April and May, utilization has oscillated in the 15–20% range since mid-June. Year-to-date utilization of just 23% continues to break modern-day record lows. - BMO Aug 13
  • Global oil demand outstripped supply in July for the first time since April 2008, offering some long-overdue fundamental support for the recent rebound in crude futures prices. Preliminary PIW soundings show a modest 320,000 b/d increase in global supply to 84.25 million b/d last month trumped by a 700,000 b/d rise in demand. This left supply some 259,000 b/d short of demand, reversing the 125,000 b/d surplus in June and the nearly 1.4 million b/d overhang seen in May.- Petroleum Intelligence Weekly
  • Crude oil imports were extremely strong last month, up a massive 42% YOY and 14% MOM to a record 4.63 million barrels per day. In the same month, China’s crude run reached a record 33.11 million tonnes, or 7.82 million barrels per day, up 8.3% YOY. Although the oil trade and crude run data are extremely strong, we caution that stocking might explain part of it. - Scotia Aug 13

Coking Coal
  • The principals from Shanxi Coking Industry Association said that since July, the steel price has rising continuously and the coking coal is not only with a tight supply, but also the price increased by 100-200 yuan per ton, which resulted in the more serious losses in coking enterprises, especially Shanxi coking firms. It is reported that Shanxi Coking Industry Association suggests enterprises to arrange production with a 30% production curtailment to stabilize the market supply and lower the inventories, while the previous production limitation rate was 50%. - MetalBiz Aug 10
  • Ken Talbot, former head of Macarthur Coal and mining magnate, said in a mining conference this week that the global economy would almost certainly exceed pre crash levels. He added that the next boom would be even stronger than the last one. - SteelGuru Aug 10

  • [Peabody CEO] Boyce said China had built up stockpiles of steel and other products, and he was sceptical the country would maintain its pace of imports of metallurgical and thermal coal in the second half of the year...'We're seeing signs of both of those slowing down right now as China has kind of gone through their first stimulus, and their export economy has not recovered,' Boyce told reporters during a visit to Australia...The comments mark a U-turn from late last month, when he said China would continue to be an increased buyer of metallurgical coal due to its growing steel production - Reuters Aug 11

  • Spot prices for top quality Queensland hard coking coal have risen to just over $160/mt FOB Australia, having accelerated from $140-$145/mt FOB basis at the end of July, as an increasing number of steel mill customers have returned to the market in recent weeks...“Met coal demand is surging, since major steel mills eased their cutbacks in production and this has prompted spot prices to go up. I think premium hard coking coal is now priced at $160/mt FOB,” said one market participant. - Macor Shipping Aug 14

Steel
  • POSCO, which suffered the worst first half on a global economic slump and high raw material prices, is forecast to see a strong rebound thanks to bullish factors in China...Subsequent to a steep surge in exports to China on China’s large scale fiscal stimulus, prices for export goods are prospected to draw a sharp rise with China’s key steel makers beginning markups...According to the steel industry and securities industry on August 11, POSCO exported a total of 502,000 tons of steel to China in the first quarter of this year. The figure merely dropped around 3.5 percent from a year ago despite an economic downturn. During the second quarter of 2009, the steel maker exported 926,000 tons, up 65.9 percent from 558,000 tons in the same period last year...Such an expansion in POSCO’s exports to China is driven by a steep surge in steel demands in China on the Chinese government’s fiscal stimulus packages. A demand growth is highly possible to continue through the latter half of the year. - Maeil Business News Aug 11
  • "Iron ore restocking pushed up the imports and prices as the stimulus package drives up steel demand," said Helen Wang, a Shanghai-based analyst with DBS Vickers Hong Kong Ltd., "Steelmakers have the motivation to ramp up production with higher steel prices. "Benchmark Chinese steel prices have soared 30 percent since April, and Baosteel Group Corp., China's largest steelmaker, can't meet "explosive" demand, JPMorgan Chase & Co. said last week. - UBS Aug 11
  • Germany's second largest steelmaker Salzgitter (SZGG.DE) does not see a sustained steel market recovery yet and expects to post a full-year pretax loss, after posting a bigger-than-expected quarterly loss..."A firm trend reversal, let alone a recovery in economic conditions in the steel industry to the level of the year 2008, cannot be realistically expected from today's standpoint. The outlook on demand for steel remains lacklustre," it said in a statement. - Reuters Aug 13

Nickel
  • Nickel Stainless cold rolled prices to rise for the first time in 2 years...The supply balance gets tighter with dealer inventories at the end of June decreased 36.7% yoy - JMB Aug 11
  • Premiums paid for nickel in Asia fell for the first time since March, signalling a possible slowdown in demand from China, the world's largest buyer of the metal, according to researcher CRU Group...A slowdown in China "is what we expect is the case," Collignon said. "Chinese imports have come down in recent weeks, so local premiums which we get from Japanese traders have declined as a result." - Bloomberg Aug 13

Zinc
  • China's refined zinc production may reach an all-time record in the third quarter following the start-up of 300,000 tonnes of new annual capacity and greater use of existing capacity due to high prices, an analyst at state-owned research group Antaike said on Friday. Rising output in China, the world's top zinc producer and consumer, could pressure London Metal Exchange prices, which have risen more than 50 percent this year. "Refined zinc output will rise to a record 400,000 tonnes (a month) level in the third quarter," Feng Juncong, senior zinc analyst at Antaike, said. "High prices are encouraging smelters to produce." Official data showed refined zinc output reached an 11-month high of 366,700 tonnes in June. - Reuters Aug 11
  • About 700,000 tonnes of refined zinc are stored in warehouses, more than 2 months of Chinese consumption, Feng estimated. The stocks included 102,269 tonnes at Shanghai Futures Exchange's warehouses as of July 30 and the State Reserves Bureau's holding of 159,000 tonnes it bought from smelters between late 2008 and early 2009, when smelters were struggling with weak demand and low prices. - Reuters Aug 11
  • Higher output of Chinese galvanized steel in the first half of the year, due to the growth in the local automobile and construction sectors, resulted in increased zinc consumption, the state-run nonferrous metals information provider, Beijing Antaike, said Thursday. Both Antaike and key Chinese zinc producer Hongda Group said domestic zinc demand in the summer, which is a slack season, was better than usual on the state's stimulus package. Zinc is used in processing galvanized steel. China produced over 8.2 million mt of galvanized steel in H1, up 13% year on year, according to Antaike. China produced 5.977 million automobile units in H1, up 15% year on year, according to the China Association of Automobile Manufacturers. - Platts Aug 14

Copper
  • China's imports of the metal declined from a record in July and the strengthening dollar eased inflation concerns. The metal declined as much as 1 percent after China's imports of copper and its products dropped for the first time in six months in July, after higher prices made purchases unprofitable. Imports decreased to 406,612 metric tons last month, the Beijing-based customs office said today. That's down 15 percent from a record amount in June, according to Bloomberg data. - Bloomberg Aug 11
  • Mitsubishi Materials Corp, Japan's No. 3 copper smelter has returned to full production, the firm said on Monday, becoming the first major Japanese firm to reverse cuts, although the situation still needs watching. Most Japanese smelters have been producing about 10 percent less copper than their capacity since early this year after the global economic crisis drastically cut demand for the metal, used in a wide range of sectors from electronics to power. - Reuters Aug 11
  • China's copper consumption during the first half of this year hit 2.8 million mt, up 14% year on year, Beijing Antaike, the state-run metals information provider, said Thursday, attributing the rise to the country's support for the local power sector. Other industry experts in China said the higher H1 copper consumption was also due to decreased copper scrap imports by China in the face of tight global scrap supplies, as well as the recovery in the domestic economy on the state's stimulus package. China's H1 copper scrap imports were 1.738 million mt, down 40% year on year, customs figures showed - Platts Aug 14
  • Codelco, the world's largest copper producer, increased output by 15 percent in the first half of this year as it mined ore with higher metal content. Production rose to 822,000 metric tons, up from 715,000 metric tons a year earlier. - Bloomberg Aug 14
  • China’s imports of unwrought copper and copper semis fell 14.6% MOM to 406,612 tonnes in July, breaking a five-month run of record inflows. Given the low Shanghai-LME price ratio seen back in June, this sequential drop in imports was well expected, both by us and by the market. We expect China’s copper and other base metals imports to continue to drop into the late summer months, as the Shanghai-LME price ratio has remained depressed over the past two months. It is also worth noting that China’s copper scrap imports rebounded sharply in July to 450,000 tonnes, from 280,000 tonnes in June. - Scotia Aug 13
  • According to the preliminary ICSG data, the refined copper market balance for April 2009 indicated a deficit of around 120,000 metric tonnes (t), principally owing to high net Chinese imports of refined copper and the consequent increase in their monthly apparent usage.1 When making seasonal adjustments for world refined production and usage, April showed a deficit of about 50,000 t. The apparent refined copper balance for the first 4 months of 2009, including revisions to data previously presented, indicates a production deficit of around 35,000 t (a seasonally adjusted surplus of 141,000 t). This compares with a production deficit of 147,000 t (a seasonally adjusted surplus of 26,000 t) for the same period in 2008. - ICSG July 22
  • In the first 4 months of 2009, world usage is estimated to have decreased by 2.9% compared with that in the same period of 2008 as a 38% increase in Chinese apparent usage partially offset a decrease of 18.5% in the remaining countries. Chinese apparent usage has been fueled by a 119% increase in net imports of refined copper, but production of semimanufactures, an indicator of actual copper usage, has risen by only by 1.2% over the same period. This disparity may reflect an increase in unreported inventories and/or substitution of refined copper for scrap: Imports of scrap for the first four month of 2009 fell to 1.1 million tons (MT) from 1.9 MT during the same period in 2008 (-42%). Copper usage was weak in other important markets such as the EU-15 countries, Japan, and the United States, where it decreased by 23%, 42%, and 23%, respectively. These three regions currently represent around 30% of the world total copper usage. - ICSG July 22
  • The International Copper Study Group (ICSG) summed up the medium-term copper supply problems alarmingly in July by significantly revising down to 3.8% its projection for mine production capacity over 2009-2013 from a previously anticipated rate of growth of 5%; this means some 3.9 Mt of new mine or expanded mine supply will come on stream over the next four years, or about 1.2 Mt less than that previously forecast. - Mineweb Aug 1
  • With Chilean mine production nearing its peak, (Cochilco expects production to increase through to at least 2012) the world will become increasingly reliant on green-field projects to make up for the supply shortfall, and most of these are based in regions with high levels of risk, both political and commercial, such as the DRC, Russia, Pakistan and Mongolia . These areas of the world have a lot of copper - potentially. But that potential may be perpetually a promise rather than a reality, given the risks involved. - Mineweb Aug 1
  • The inflow of refined copper into China in the period December 2008-June 2009 is almost 2 Mt, up 149% from the same period last year and 101% from the same period two years ago. It is therefore not surprising that this has seemed very bullish for the copper price, especially since it has drawn more than half the metal that had been sitting in LME warehouses. - Mineweb Aug 1

  • Hunt considers himself an avid China watcher and casts doubts on the officially stated GDP and growth figures.  He has been vising China regularly since 1993 and reckons that  no-one really knows what is China's actual copper consumption. "Everyone thinks they do.* he says. "The problem is that so much of wire rod and brass mill output is derived from small mills which people tend to disregard. In 2007, for instance, the small Chinese upward cast rod mills accounted for over 40% of totalwire rod production. Probably 25% have had to shut down since mid-2008." - Mineweb June 19


Gold
  • Italian jeweller Damiani said it saw signs of demand stabilising even though the economic situation remains difficult, as it reported it had swung to a net loss for its first quarter of 3 million euros. In a statement on Friday, Chief Executive Officer Guido Damiani said "most recently, some signs lead us to believe that future demand is stabilizing." He added that Damiani would keep "a close watch on cost containment and a selective approach to investments," - UBS Aug 10

  • Scrap exports surged and Turkish imports crashed from 48 tones in June 2008 and remained minimal until a year later, although imports were still only 4.1t in June 2009, and a more reasonable 14.1t in July 2009. Volumes and premiums on the IGE picked up in June this year and while neither can be considered strong, these are signs that some normality is returning to the Turkish market...In more normal times (ie 2007 for example) Turkey is the fourth largest consumer of gold: it is also an important entry point for gold into some countries in the Middle East, especially Syria and Iran. Weak Turkish imports are indicative of a broader gold malaise in the region and these signs of recovery should be welcomed by those that follow the physical gold market. - UBS Aug 11

  • A section of India's top gold merchants are preparing for a sharp pick-up in gold sales this festive season, suggesting demand by the world's top consumer is rebounding despite near-record prices and a bleak monsoon. Five of seven of the country's big retailers surveyed at the India International Jewellery Show said they see sizeable growth over last year's sales, which had been depressed by the surge in prices as the financial crisis peaked. - UBS Aug 11

Potash
  • Consistent with recent remarks from Agrium, Intrepid indicated that potash purchases in the Cornbelt have picked up recently, but the company remains cautious about the pace of recovery. Intrepid has built 200,000 st of potash inventory in the last three quarters and has increasingly shifted this product into Cornbelt distributor warehouses on a consignment basis. The company is expecting a condensed fall application season as dealers/growers delay purchasing decisions to be closer to the time of use. The season could also be pinched by the combination of a late harvest and an early winter.  - Merrill Lynch Aug 10
  • Purchases of potash, used to grow rice, soybeans and sugar cane, in the six months ending Sept. 30 may be less than 2.16 million tons, Srikant Jena, minister of state for chemicals and fertilizers, said in an interview in New Delhi yesterday.- Bloomberg Aug 11
  • All the major potash producers have secured sales into Brazil near $525/mt, with Russian-sourced product now being quoted in southeast Asia at $510/mt (for standard product) and in the US Gulf for $470/st (= $517/mt). This latter price is consistent with Canadian list prices near $470/st (fob Saskatchewan) and with southwest US list prices of $480-490/st (fob New Mexico/Utah). The effective delivered price in the Cornbelt from all three sources is near $515/st, consistent with spot retail prices in the region (see Chart 8).- Merrill Lynch Aug 11

Grains
  • The USDA will release its monthly WASDE report on Wednesday, and we look for upward revisions in the corn production estimate. Given favorable crop conditions relative to prior year levels (see nearby chart), the market is expecting a US corn yield estimate increase by 3-4 bu/acre to ~157 bu/acre, versus the July report estimate, partly offset by slightly less acreage. Some grain consultants are predicting yields near the 2004 record of 160 bu/ac, which if realized, would clearly put pressure on corn prices and the fertilizer stocks. - Merrill Lynch Aug 12

Japan Economy
  • Japanese machinery orders rose more than economists estimated in June, the first gain in four months and the latest sign that the nation’s worst postwar recession is easing...Bookings, an indicator of capital investment in the next three to six months, rose 9.7 percent from May, the Cabinet Office said today in Tokyo. The median estimate of 22 economists surveyed by Bloomberg was for a 2.6 percent increase. - Bloomberg Aug 10


US Economy
  • U.S. consumer credit outstanding fell $10 billion in June, the fifth decline in a row during which the debt balance has shrunk $60 billion or 5.5% at an annual rate – both figures are unprecedented. As the chart below shows, the YoY trend, at -2.8%, is also running at its steepest contractionary rate in over five decades. Welcome to the new paradigm of savings, asset liquidation and debt repayment – the era of consumer frugality. After 20 years of living beyond their means, American consumers will be spending the next several years living below their means, and no, this will not be the end of the world, but it will put a firm ceiling on overall demand growth for some time to come.- Rosenberg Aug 10
  • Auto shoppers may not find their preferred colours or accessories when they visit U.S. showrooms this weekend as the government's "cash for clunkers" program depletes inventories. Automakers may need four to six weeks to rebuild supplies, said John McEleney, chairman of the National Automobile Dealers Association..."With this quick spike in sales, it has wiped out a lot of inventory," McEleney, who owns dealerships in Iowa City and Clinton, Iowa, said in an interview yesterday. "The selection won't be quite as great." - Reuters Aug 10
  • Deutsche Bank has put out a report on residential real estate that will raise the hair on the back of your neck, if you still own your own home. Prices have not hit bottom and have another 14% to fall by 2011, putting in a 42% fall from top to bottom. By then, almost half of all mortgage holders in the US will be underwater.- MadHedgeFundTrader Aug 10

  • The 0.1 percent decrease followed a revised 0.8 percent gain in June that was larger than previously estimated, Commerce Department figures showed today in Washington. Purchases excluding automobiles fell 0.6 percent, also more than anticipated. . - WSJ Aug 14

  • Initial claims for jobless benefits rose by 4,000 to 558,000 on a seasonally adjusted basis in the week ending Aug. 8, the Labor Department said in its weekly report Thursday. The four-week average of new claims, which aims to smooth volatility in the data, rose by 8,500 to 565,000 -- the highest since July 18...The tally of continuing claims -- those drawn by workers for more than one week -- fell by 141,000 during the week ended August 1 to 6,202,000 -- the lowest level since April 11. - WSJ Aug 14

  • A U.S. future economic growth gauge rose in the latest week, as its yearly growth rate surged to a 26-year high, suggesting that recovery will commence at the briskest pace in decades, a research group said on Friday...The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index rose to a 47-week high of 123.9 in the week to Aug. 7 from a downwardly revised 121.7 the prior week, which was originally reported at 121.8. - Reuters Aug 14

China
  • China’s exports and new loans tumbled in July and industrial output rose less than estimates, underscoring government concern that the world’s third-biggest economy is yet to establish a solid recovery...Exports fell 23 percent from a year earlier, the customs bureau said. Industrial production gained 10.8 percent, the statistics bureau reported. New loans plunged to 355.9 billion yuan ($52 billion), less than a quarter of June’s level, the central bank said...the statistics bureau said retail sales rose 15.2 percent, more than estimates. - Bloomberg Aug 10

  • “We noticed that some loans didn’t go into the real economy,” Zhang, 54, said in an Aug. 6 interview at the bank’s headquarters in Beijing. “I feel that some industries are expanding too rapidly. For example, housing prices are rising too fast, and housing sales are growing too fast.”...UBS AG said in a July 31 note that the scale of China’s new lending in the first half was “neither sustainable nor necessary.” New loans of 300 billion yuan to 400 billion yuan a month in the second half would be “more than enough” to support the nation’s recovery, the report said.- Bloomberg Aug 10

  • Chinese imports of iron ore increased 5% m/m (47% y/y) to 58.1Mt tonsand crude oil jumped 18% m/m (42% y/y) to 4.64MMbbl/day in July,topping previous records. In contrast, July saw a modest slowdown inprimary metal imports. Unwrought copper imports were off 15% m/m to 406kt. Nonetheless, imports are 75% higher so far this year, havingalready surpassed the 2008 total. Conversely, copper scrap was up 61%over the June print. This represents a downside risk for copper prices, asthe shortage of secondary material had extended primary restocking beyond the traditional seasonal period. If prices remain above US$2.75/lb,more scrap is likely to materialize and Chinese buyers may actopportunistically. - BMO Aug 11
  • July new bank lending was RMB 356 bn, lower than our expected RMB 550 bn, however, bill financing contracted by about RMB 200 bn, so the implied new underlying lending was about 550 bn. Market is likely to be disappointed, but worries of any imminent tightening should abate. - UBS Aug 11
  • Fixed asset investment decelerated while retail sales stay strong: FAI investment decelerated in July to just below 30% y/y, while retail sales remained strong at 15.2% y/y; industrial value added rose by 10.8% y/y in July, partly reflecting a lower base in 2008 (due to the shut down of some activity in a few provinces). Total no. of project under construction 308,914 (+29.5%), total project investment Rmb32.6tr in 7m. - UBS Aug 11
  • China’s power demand rose 6 percent in July as the government’s stimulus spending boosted economic growth and increased industrial use of electricity...Power consumption rose to 342 billion kilowatt-hours last month, the National Energy Administration and the China Electricity Council said separate statements today. Power demand between January and July fell 0.9 percent to 2 trillion kilowatt-hours.- Bloomberg Aug 14
  • In July, the property market in China continued to show exceptionally strong sales. Total floor space sold was up a massive 67.7% YOY. However, land acquisition, land development, and new starts were still lagging, down 22% YOY, down 0.6% YOY, and up 0.76% YOY, respectively. This shows that de-stocking has continued in the property market in China. Floor space under construction, a key concurrent indicator for China’s steel use, was up 7.4% YOY in July, down from the 25% YOY gain seen in June. - Scotia Aug 13

India Economy
  • India’s industrial production increased at the fastest pace in 16 months in June, adding to signs that Asia’s third-largest economy has escaped the worst of the global recession...Output at factories, utilities and mines jumped 7.8 percent from a year earlier after a revised 2.2 percent gain in May, the statistics agency said in New Delhi today. That was more than double the 3.8 percent rise expected by economists. - Bloomberg Aug 12
  • Production of consumer durables such as cars, refrigerators, washing machines and air conditioners rose 15.5 percent in June from a year earlier after gaining 12.5 percent in the previous month, today’s report showed. Manufacturing increased 7.3 percent, mining advanced 15.4 percent and electricity gained 8 percent in the month. - Bloomberg Aug 12
  • Manufacturing output in India rose for a fourth month in July, according to a Purchasing Managers’ Index prepared by Markit Economics. The measure stood at 55.3 last month, unchanged from June. It was the fourth monthly reading above 50, which indicates factory production increased. - Bloomberg Aug 12