On the matter of Chinaâs rampant April commodity purchases, interpreted by some as a recovery signal, Shan Shanghua, secretary general of the China Iron and Steel Association told Chinese media on Wednesday: âThe amount of ore that small mills buy canât be enough that it would result in such large import levels. This sort of import volume fakes the level of demand in our country, and itâs not good for the iron ore price talks.â Dow Jones reports Chinese steel industry officials now plan to investigate the recent spate of record imports, which have mostly stemmed from the âbig threeâ miners Companhia Vale do Rio Doce, Rio Tinto Plc and BHP Billiton. Some further detail is offered by the Straits Times which reports Beijing has now told banks to curb loans to steel makers that are increasing production despite falling demand and falling prices: Beijing issued the order to cut or stop lending to steel producers âstill expanding production capacity without considering actual market demandâ, the China Securities Journal reported, citing an official notice. The notice, which was not released publicly, also called for banks to curb or cut off loans to mills with outdated technology, the report added. In addition, it told iron ore importers to âcorrectly control the volume and pace of iron ore imports in line with the actual demand of domestic steel productionâ. Bad, bad, naughty miners. http://ftalphaville.ft.com/blog/2009/05/14/55869/quote-du-jour-chinas-fake-recovery-edition/
The volume of non performing corporate loans in China over the next couple of years could be mind boggling.