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Saturday, May 26, 2012

The Chinese Resource Supercycle Slows Down

From the Globe and Mail:


In the far corner of the Haidian district near Beijing’s North Fifth Ring Road highway, a young steel salesman, Sun Minglong, sits in the near-deserted storefront office for the Beijing Jicheng Heng Da Gang Tie Ji Tuan steel company.
The company’s warehouse, once brimming with steel building components, is now only one-third full, Mr. Sun laments. Beijing’s construction boom, in full force up until just a few months ago, has geared down sharply. Mr. Sun says sales are so slow these days, he no longer orders new stock unless a buyer requests it.
“The profits in steel are getting really bad now, because Beijing’s housing market is slowing down. Nobody is building any houses because they don’t make money anymore,” Mr. Sun said. “Compared to last year there has been a real decline. Personally, I think it’s going to get worse and worse.”
The ripple effects from China’s slowing economic growth are being felt from Beijing to British Columbia. At risk is a nearly decade-long run of unquenchable demand and high prices for a range of metals and other commodities, powered by relentless spending on homes, office towers, and transportation and communications infrastructure across China.

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