Newswire: China

China sovereign wealth fund speeding up investment – mining a target – Mineweb

China’s sovereign wealth fund CIC has been speeding up its investment programme spending as much each month this year as in the whole of 2008 – and mining and energy are important targets.

China takes tough ore stance – The Shanghai Daily

China won’t necessarily follow iron ore contract price agreements set by steel mills in other nations, a senior industry official said, as it fired the first salvo in the upcoming annual negotiations for the 2010-2011 fiscal year.

“We will not insist on other countries taking China’s iron ore price as a reference, and we will also not blindly accept prices agreed to by other countries,” Shan said. His remarks are not new because China has not formally settled a contract price with iron ore majors for 2009-2010, but “China’s intentions are important” as it’s the biggest buyer of the steel making ingredient, investment bank UBS noted.

China’s economy expands by 8.9 pct in third quarter – chinamining.org

China’s economic growth accelerated to 8.9 percent year on year in the third quarter, and 7.7 percent year on year in the first nine months, the National Bureau of Statistics (NBS) said Thursday.

China May Pare Economic Stimulus to Control Inflation – Bloomberg

Chinese officials may be preparing to reduce monetary stimulus that propelled growth to 8.9 percent in the third quarter and led the world out of recession.

The economic expansion the government reported yesterday exceeded the 7.9 percent gain in the previous three months and pushed stocks lower in Asia and Europe on concern the central bank may tighten monetary policy. On the eve of the release, the cabinet signaled that inflation concern will play a greater role in setting policy.

China launches Nasdaq-style market to spur small businesses – Xinhua

China held a launching ceremony Friday for its Nasdaq-style market, ChiNext, in Shenzhen, Guangdong Province. The first batch of 28 selected firms will make their debut on Oct. 30 on the Shenzhen-based exchange.

Shougang Hierro strike approaching its end as an agreement is reached

Progress is being made down in Peru between Chinese miner Shougang Hierro and the workers who have been protesting for weeks now against unfair wages and treatment by their Chinese owners. Nothing new… for the record, there are few international companies which invest in the Peruvian mining industry and thereafter roll out the red carpet for their workers. It’s mining, not investment banking…

The 1200 striking workers have begin working again according to manager Julio Ortiz, who said they returned to work because the company said it would commit to some of the workers demands.

Currently workers earn a salary of 1,770 ($614) Peruvian soles a month and the company has released a statement saying Shougang is willing to raise the daily salary by 5.50, or 165 soles a month—bringing the new total to 1935 soles ($677).

According to this Reuters article (in Spanish), Shougang earned a solid 417 million soles last year ($144.7 million dollars), a increase over the year before of 50%.

All in all, it seems Shougang won this battle… CSA will continue to bring you updates on this matter in the weeks to come.

Newswire: Commodities

China Nurtures Futures Markets in Bid to Sway Commodity Prices - WSJ

ZHENGZHOU, China — Chinese leaders are concerned that their nation’s enormous economic expansion is becoming an excuse for foreign suppliers to inflate commodity costs. So, they hope to use their three futures exchanges to fight back.

“It is true we have a long-term goal of increasing our influence in terms of pricing, but to do that we have to create conditions and do it step by step,” Jiang Yang, chief futures-industry policy maker and assistant chairman of the China Securities Regulatory Commission, said in an interview. “But as the Westerners say: ‘Rome was not built in a day.’

But Beijing believes hosting big futures markets will enhance the country’s economic security by essentially advertising what the world’s biggest customer for some commodities considers a fair price. For the rest of the world, the exchanges could mean less guesswork about China’s buying habits, possibly reducing volatility in the global market.

Silver Lining: Jim Rogers Talks Up Commodities – Time Magazine

Jim Rogers’ daughters may not have been born with silver spoons in their mouths, but they’ve got them now. Not silver spoons, exactly, but silver bullion. “My little girls don’t own stocks — they own commodities,” he says, “and that’s why they’ll be able to take care of me in retirement.”

Rogers sees three big secular trends now, and he’s acting on all of them. First, America’s role as the dominant economic power is declining, so why own American stocks? (He doesn’t.) Second, China is emerging, and even though it may have crises from time to time, it is a good place to invest. (He does.) Third — and this is the biggie — emerging nations including China are greatly increasing the future demand for commodities such as oil. (He’s in with both feet.)

“Thirty years ago, 3 billion people were not even participating in the world economy, and now they are trying to live like we do,” he notes. That emerging megaforce, says Rogers, will put a supertight squeeze on commodity prices across the board, from beef to bullion.

Oil Climbs Above $73, Nat. Gas Rallies as Equities Fly High – Rigzone

Jumping toward $74 a barrel on an American holiday, crude oil rallied more than $1 from last week’s closing price, bolstered by a weaker dollar and a rise in the equities market. Also gaining today, natural gas closed 12 cents below $5 as the energy commodity continues to strengthen despite bearish fundamentals.

After rallying to an intra-day high of $73.84, the price of crude oil settled slightly lower to $73.27 on the NYMEX Monday, a gain of $1.50 from Friday’s close. Additionally, the US dollar eased against a basket of foreign currencies, helping to spur a rally in today’s commodity prices.

China Iron Ore Imports Exceed Real Demand, CISA Says – Bloomberg via Chinamining.org

Iron ore imports by China, the world’s largest buyer, have exceeded real demand by 50 million metric tons this year, the country’s steel association said.

China’s iron ore imports surged to a record this year, hurting the group’s bid to negotiate a contract price cut bigger than the 33 percent offered by Rio Tinto Group and BHP Billiton Ltd. The nation is looking at cutting the number of licensed importers, industry minister Li Yizhong reiterated today.

Strike continues at Shougang in Peru (update)

Reuters released their latest update on the ongoing strike occurring at Chinese owned iron ore mine, Shougang.

LIMA (Reuters) – Shougang Peru operations stopped by strike

Shougang Hierro Peru, the country’s only iron ore producer, said on Monday a week-old strike at its mine had halted production and slowed mineral shipments.

The company’s comments were its first since some 1,200 workers walked off the job more than a week ago in a bid to pressure Shougang (SHP.LM: Quote) to raise wages.

“Workers are on strike, therefore (the mine) is not producing,” Raul Vera, Shougang’s chief executive, told Reuters.

Click here to access the complete update on the situation, courtesy of Reuters

Reuters Update: Strike at Shougang Peru mine enters fifth day

A strike of some 1,200 workers at Shougang Hierro Peru (SHP.LM), a unit of China’s Shougang Group, entered its fifth day on Friday with no end in sight, union leaders said.

“We don’t see a solution, there’s no dialogue with the company,” said Julian Sulca, a union official.

Click here to access the full article from Reuters

Protests erupt in Peru at Chinese owned miner Shougang

Reuters reported a few days back that workers at the Chinese owned Shougang Hierro Peru (SHP.LM), which happens to the only iron producer in the country of Peru, were planning a strike.

Well today the workers took action. A leader of the workers union told Reuters reporters “that all 1,200 workers at the mine had joined the labor action.”

More updates to come in the days to come. Click here to access the Reuters wire on this story directly.

Studies to Eliminate Dollar in Brazil-China Trade Going Slow

China and Brazil have created a work group to study the possibility of implementation of a bilateral trade program in their respective currencies, in replacement of the North American dollar, said a source in the Central Bank of Brazil.

“The negotiations are still in an initial phase, with a work group having been created with representatives of Brazil and China, who also met during the G-20 summit, in London,” explained a source.

The next step should be the visit of a Central Bank of Brazil delegation to China, “despite there being no forecast as to when it may come true,” said the source.

The work group should analyze the “results to be reached through an agreement that China recently established with Argentina” – the first country in South America to benefit from trade exchanges in the same currency with the Asian giant and with whom Brazil has also been developing the same program since September 2008.

The Central Banks of China and Brazil are also going to develop a “study of the potential bilateral trade volume to analyze the possibility of an agreement.”

Click here to read the full article

Written by Newsroom
Wednesday, 16 September 2009
[Source] – brazzilmag.com

a2a_linkname=”Studies to Eliminate Dollar in Brazil-China Trade Going Slow”;a2a_linkurl=”http://chinasouthamerica.blogspot.com/2009/09/studies-to-eliminate-dollar-in-brazil.html”;

Asian smelters to benefit from Doe Run Peru shutdown

Doe Run Peru shut down its lead and zinc smelter on June 2 after the company ran out of money and credit, therefore rendering it unable to buy the raw materials being produced at near by mines.

According to this Bloomberg article, guess who’s stands poised to benefit from this? You guessed it Asia’s smelters, who despite the global slow down remain hungry for
more.

Alex Emery in Lima down in Lima writes:

Glencore International AG, the world’s biggest commodities trader, and Trafigura Beheer BV are benefiting as suppliers of Doe Run Peru’s shut lead and zinc smelter seek international traders to sell their concentrates.

“We’re looking for more clients abroad, particularly Asian smelters,” to buy the extra production, Glencore’s Peruvian manager Fernando Cafe said in a July 3 interview.

Cia. De Minas Buenaventura SA, Pan American Silver Corp. and about 30 other miners in the central Peruvian Andes have had to seek alternative buyers after the Renco Group Inc. unit smelter ran out of cash and halted all operations on June 2…

To read the complete article please visit the complete Bloomberg article.

[Commodities] — Is the rally over?

Commodity Rally May Falter on Supply, Speculators

June 29 (Bloomberg) — Commodities, heading for the first quarterly advance in a year, may struggle to repeat their gains in the next three months as supply expands and speculators sell.

Nickel may average 29 percent less in the third quarter than now, crude oil 16 percent, copper 14 percent and gasoline 10 percent, analyst estimates compiled by Bloomberg show. Hedge funds and speculators cut their bets on higher prices by 23 percent in the two weeks ended June 23, the first back-to-back drop since March, based on an index using U.S. Commodity Futures Trading Commission data. The World Bank said June 22 the global recession will be deeper than it expected three months ago.

“Commodities have gotten a little ahead of themselves,” said Walter “Bucky” Hellwig, who helps oversee $30 billion at Morgan Asset Management in Birmingham, Alabama. “As long as there’s uncertainty about growth, that’s going to be headwind commodities won’t be able to overcome.”

Commodities rose 14 percent this quarter, led by nickel, oil and sugar, after three consecutive declines, according to the Reuters/Jefferies CRB Index of 19 raw materials. This year’s 57 percent advance in oil costs, combined with widening budget deficits, may cause another global slump, said Nouriel Roubini, the New York University economics professor who predicted the financial crisis.

Click here to access the full article from Bloomberg

Peru ETF to start trading this month reports Bloomberg

Are you a international investor with a global perspective? Are you looking to get in on all the action down in Latin America? Well now is the time to consider jumping on board the “Peruvian growth miracle?”

Before you do however, I implore you to proceed with caution if you decide to park your hard earned currency in Peru. As always, it would be a good idea to do your own due diligence and listen to what your textbook, academic gut feeling has told you about Latin America since you started reading about continent in economic and finance classes you took in college.

Peru’s Lima General Index has sky rocketed a whoppin’ 95% this year due to the following reasons in particular (in my opinion)

a) The country’s investment grade debt rating

b) Rising metals prices; copper, gold, silver, etc (note I did not include Zinc here)

c) Optimism in Peru’s metropolitan middle and upper-middle class residents of Lima who partially feed the international excitement by telling stories of economic boom. Ask a university student of la Universidad de Lima, UPC, Universidad Pacifico or a employee at Banco Santander and they will probably (some of them at least) tell you of rising apartment buildings, new beach houses and cafes so full of customers you must wait to get a table. Yes, it is still difficult to find a job that pays well, but if you know anything about Peru this has been the case since the beginning of time…

d) Shrinking investment opportunities in the region because of western fears and dislike of Chavez in Venezuela, Correa in Ecuador, Morales in Bolivia and more recently Cristina Fernández de Kirchner in Argentina.

e) LIES… LIES… oh and yes, more LIES. Farid Matuk the previous head of INEI (Peru’s statistics office) and Otto from IncaKolaNews have been telling readers for months that you simply can not trust economic data from Peru. Alan Garcia has replaced the people working at the statistics office with those loyal to his political party and they have inherently changed the way statistics are collected and the way GDP and other economic indicators are calculated.

Here are some links to Farid Matuk and Otto’s recent observations of Peru’s economic picture. I will stick to English, but I highly recommend if you can read Spanish that you check out some of Matuk’s non-English posts.

Doubts grow about accuracy of Peru GDP numbers — Reuters Terry Wade

Peru’s Economic Model and Poverty Reduction: Is it Working — Farid Matuk

Farid Matuk Explains Peru’s False GDP Figures — INK

Now that you know one side, here’s the other. GAINS AND LOTS OF THEM.

Peru Lima General Index – 2 yr performance as of 6/4/09

It seems to me the majority of the international financial community have bought into Garcia’s lies and have come to believe Peru is a solid place to park your money.

This is despite, as Otto says, demand for base metals just simply does not add up. The Chinese are stockpiling their metals and eventually prices will have to go back down to reality. Check this article.

Despite this reality, investors and what they perceive can go a long way in financial markets. If investors jump on board, this new Peruvian ETF might begin to soar… albeit temporarily until reality sets in.

Benito’s conclusion: Invest with caution. I’ve included the Bloomberg article below, but if you like to access it directly, please click here.

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Peru ETF to Start Trading This Month, Global X Says (Update1)

By Veronica Navarro Espinosa

Peru’s first Exchange Traded Fund will start trading on the New York Stock Exchange by the “middle of June,” said the chief executive officer of Global X Management Company LLC, a New York-based asset manager.

“The stock market has risen a lot, investors are bullish, and that’s helping us,” Bruno del Ama, the New York-based CEO of Global X, said in a phone interview. “We’re giving access to the Peruvian market and in the future people can go short in Peru, which is an option that doesn’t exist today.”

Global X and Barclays Plc have been competing to introduce the first Peruvian ETF, aiming to lure global investors to the world’s best performing stock market this year. The funds issue a number of shares and trade throughout the day like stocks. Most are designed to passively track a benchmark equity index.

Peru’s Lima General Index has jumped 95 percent this year on speculation a rebound in prices of the country’s commodity exports will fuel growth amid the global recession. The index’s advance is the biggest among 92 world benchmarks tracked by Bloomberg, reversing a 60 percent plunge in 2008 that was the steepest in Latin America.

“It will create liquidity and that’s what this market lacks,” Carlos Rojas, who manages $160 million in Peruvian stocks and bonds for Compass Peru, said in a phone interview from Lima. “But it’ll all depend on the size. If it attracts less than $150 million, it’ll be a non-event.”

FTSE Peru 20

The new ETF will track the FTSE Peru 20, which will include the nation’s biggest commodity producers such as Maple Energy Plc., an oil and natural gas producer that has gained fourfold this year, the best performer in the index. Del Ama said other members include Austral Group SA, Peru’s biggest fishmeal producer, and Cia. de Minas Buenaventura SA, the largest precious-metals producer.

Resource companies account for 21 of the 36 stocks in the Lima index because Peru is the world’s third-largest producer of copper, zinc and tin, the biggest miner of silver and the fifth- largest of gold.

IShares, a unit of Barclays, is working on introducing its own Peruvian ETF, said Barclays spokeswoman Christine Hudacko in an e-mail today. There’s “no news on timing,” she said.

The iShares MSCI Brazil Index Fund, managed by Barclays, is among the 10 most-traded ETFs in New York, with daily volume of about $1 billion, Barclays Global Investors’ chief executive for Latin America Daniel Gamba said in December. Trading in ETFs in Mexico now accounts for about 20 percent of average daily volume, Gamba said.

[Source] — Bloomberg