Why Chinese metals markets are warping commodity dataAngus Walker
Steel prices in China have been close to all time lows, iron ore looks shaky as well, as demand falters amid worrying manufacturing data, and yet Chinese imports of the two most important commodities in the world are at record levels. Saxo Bank's Head of Commodity Strategy Ole Hansen has been analysing the situation. He's spotted evidence that commodities are being used to finance loans, warping the markets, making it even more tricky to assess the true state of China’s economy.
One of the risks for this market is if Steel prices see a sudden fall which would sharply reduce the value of the commodity collateral. This year steel has seen five percent lows and iron ore has been down around nine percent, amid increasing concerns about a credit crunch in China.