Global Restocking and China

Wednesday, September 2, 2009 0:18
Posted in category Uncategorized

This afternoon, Jonathan Anderson from UBS sent out two messages related to “restocking and China” that will prove interesting to readers who are looking for the bottom of this economic cycle.

The first was a research note (email me for the full note), where Anderson’s analysis leads to the following conclusions:

  1. Metals and mining are at an apparent crossroads. The global lead indicators are suggesting that the world ex China is entering a cyclical recovery, driven by restocking and fiscal stimulus
  2. China’s recovery has seen a surge in materials activity and imports in the past four months, and although August has been punctuated by a retreat in sentiment with falling steel prices and A-shares, we believe China is less overstocked than expected, and that the accumulated weight of monetary and fiscal stimulus will continue to support materials consumption.
  3. Supply conditions for most metals and raw materials still look tight: Nearly all operators have been focusing on capital preservation in time of weak demand by cutting production, investment and employment for recession.
  4. The supply condition that is still geared for recession: A lot of the surge in China’s consumption in Q2 09 has been supplied out of global inventories,
    leaving supply potentially challenged when the rest of the world returns to normal consumption.

A picture that is quite different from the one that Andy Xie painted on Bloomberg yesterday, and one that would seem overly optomistic by many depending on who you speak with as there is no clear direction as to why metals have been acting the way they are, or when restocking will occur.

Which leads to the next announcement. Tonight, UBS will be hosting another conference call, and you can participate! Details for joinging are below, and should you join the call, please do me a favor and send an email with the details (I’ll be at another event).

Global Metals and Mining Update: Upgrading on Global Restocking and China

Hosts
Peter Hickson, UBS Global Basic Materials Strategist
Onno Rutten, UBS North American Metals & Mining Analyst
Andreas Bokkenheuser, UBS Asian Mining and Commodities Analyst
Andrew Snowdowne, UBS Co-Global Steel Coordinator, European Steel Analyst
Glyn Lawcock, UBS Australian Energy, Mining, & Metals Analyst

Date & Time: Wednesday, 2 September 2009 — 09:00 New York // 14:00 London // 21:00 HK
To Register: Participants MUST pre-register for the call: Click Here

Also, prior to the call, I would highly recommend you take a loot at the MEtal Miner report that just came out. Lisa is an old friend whose analysis is usually spot on. I have not had time to review the paper yet, however I know she put a considerable amount of time and experience into the paper. Download here

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One Response to “Global Restocking and China”

  1. chinatells says:

    September 6th, 2009 at 4:44 pm

    So Far only China’s stimulus program is really focusing on the infrastructure sector, which has a direct impact on commodity market. The rest is either not big enough, or diversified into other sectors (ie., health, bad loan, etc). Such a feature can be noticed from the recent development of BDI. Without China re-stocking, the freight market keeps feeling the pressure of over supply. You can find more analysis on http://www.chinatells.com.

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