Chinese Iron Ore Stockpiles Rise To Record As End Demand Plummets

Chinese Iron Ore Stockpiles Rise To Record As End Demand Plummets

"It may not be one of the core three ...econometric indicators of China's economy ..., but when it comes to getting a sense of capacity bottlenecks in China's fixed investment pipeline ... nothing is quite as handy as commodity, and particularly iron ore .. stockpiles at China's major ports."


http://www.zerohedge.com/sites/defau...%20Ports_0.jpg



I think most importantly, the article does indicate that the stockpiles are being used for loan collateral.

Chinese Iron Ore Stockpiles Rise To Record As End Demand Plummets | Zero Hedge

Chinese businesses have also used copper as collateral for financing. It's a way to get around government attempts to control credit expansion.

Then last year, the Chinese monetary authority implemented new rules that made it more difficult to use copper as collateral. Those went into effect around midyear 2013, right about where you see the iron ore inventory start shooting up in the chart above.

Is that chart saying they have over a billion ton surplus? If it's reading in millions of tons that's what it looks like.

Here's another tidbit to go with the equation. They've built a number of entire cities on speculation, and many of them are sitting there empty. Just yesterday I heard talk of a Chinese "housing bubble", the same thing that crashed us in 2008.
Since they're basically our "banker", what would happen if their economy collapses like ours did?

If any economy collapses it affects everything and everyone
That is the beauty of a global economy!

WOW.....
Hmmmm....
Ummmmm....

Yeah.

So what does this mean for us in the U.S. in terms of scrap?? Price Drops? Price Rises?

Rumors are that the proposed Keystone Pipeline from Canada will be built with used pipe from India. Figures.

Quote:

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Originally Posted by erewen

Chinese Iron Ore Stockpiles Rise To Record As End Demand Plummets

"It may not be one of the core three ...econometric indicators of China's economy ..., but when it comes to getting a sense of capacity bottlenecks in China's fixed investment pipeline ... nothing is quite as handy as commodity, and particularly iron ore .. stockpiles at China's major ports."


http://www.zerohedge.com/sites/defau...%20Ports_0.jpg



I think most importantly, the article does indicate that the stockpiles are being used for loan collateral.

Chinese Iron Ore Stockpiles Rise To Record As End Demand Plummets | Zero Hedge

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Actually none of that adds up. The quote says " port stockpiles", their chart says "port inventory", but if you look at the inset in the chart it says "price", and the number there matches the top of the scale

Quote:

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Originally Posted by Bear

Actually none of that adds up. The quote says " port stockpiles", their chart says "port inventory", but if you look at the inset in the chart it says "price", and the number there matches the top of the scale

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That "price" inset is confusing. The value being graphed isn't price; it's total iron ore inventory at China's ports:
"Inventories at ports were 100.25 million metric tons last week, exceeding 100 million tons for the first time since July 2012, according to data from Shanghai Steelhome Information Technology Co. Reserves increased 16 percent in 2014. ... The increase in inventory levels creates near-term downside risk to iron ore prices."
China Ore Stockpiles Rise to Record on Financing Deals - Bloomberg

The spot price for iron ore has been weak lately, and producers have been forecasting further softening in the months ahead. I don't know what that means for ferrous scrap prices.

I haven't gone through to the article, but the number on the chart is 10025.00

(same as the number beside "price" on the inset)

Neither one of those numbers could relate to a price per ton in Yuan (6.11-$1)

The 100 million metric tons does make sense though : )

( for a major aircraft carrier, 100,000 tons or so, that's only about a thousand of those ones ; )
( the thought of a billion tons had me worried for a bit : D )

If they are holding the inventory for collateral, hopefully it should be "locked away" and we shouldn't see it flooding into the market anytime soon.

Not sure about China's economy crashing significantly. Use of the yuan has passed that of the euro
http://http://www.bloomberg.com/news...-currency.html

China is also heavily investing into energy and mineral wealth
China Is Africa's New Colonial Overlord, Says Famed Primate Researcher Jane Goodall

There are probably differences between the US and Chinese housing booms - a lot of people in the US took out collateral to buy icrap, and now excess inventory is on bank books being supported by taxpayers via the Fed. Who built the housing in China? The government? Private developers? Where did that money come from? I don't know.

As a nation, we've worked hard, built great industries, and then raised cash by selling off our assets so we could buy disposables. Tennessee Ernie Ford, eat your heart out

http://www.youtube.com/watch?v=J2aqvKY6zLc