Charting China's Imminent Implosion

[Swordsmyth]

Anxieties about the knock-on impact to the global economy from the coronavirus outbreak, which appears on track to shave whole percentage points off China's GDP, have pushed stock futures back into the red Thursday morning.

But during an interview with Maria Bartiromo that aired on Thursday, Commerce Secretary Wilbur Ross argued that the North American economy might benefit from the outbreak as companies "reevaluate their supply chains" to factor in emergent outbreak risk.

While Ross insisted that he didn't want to appear insensitive, it's pretty clear to him that the outbreak could help "accelerate the return of jobs to North America."

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"First of all, every American's heart has to go out to the victims of the coronavirus. I don't want to talk about a victory lap over a very unfortunate very malignant disease. But the fact is, it does give business another thing to consider when they go through their review of their supply chain. On top of all the other things - you had SARS, you had the African swine virus there, now you have this - it's another risk factor that people need to take into account."
"I think it will help to accelerate the return of jobs to North America, some to the US and some to Mexico as well," Ross said.
Watch the clip below:

Secretary Wilbur Ross says coronavirus will be good for [checks notes] American jobs: "I think it will help to accelerate the return of jobs to North America." pic.twitter.com/Y4SbDIcTi4
— Aaron Rupar (@atrupar) January 30, 2020​

Bartiromo conceded that Ross had made an interesting point.
"Ah, that's a good point," Bartiromo responds.


More at: https://www.zerohedge.com/political...us-outbreak-will-help-bring-jobs-back-america

 

[Swordsmyth]

Over most of January, the situation in China has gone from bad to worse to worst-nightmare with factories and stores shuttered for weeks, citizens in every province under martial-law lockdowns, and coronovirus cases (and deaths) soaring at faster-than-prior-pandemic rates.

So it should be no surprise then that China's Service Economy expanded at an accelerating rate in January according to the latest government-provided PMI data.
Yes, you heard that right, against expectations of a slowdown (as would be expected with most of the nation hunkering down in terror), the National Bureau of Statistics reports that the non-manufacturing gauge improved to 54.1, compared with 53.5 the previous month (and better than the 53.0 expected).

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Reportedly, due to the Lunar New Year holiday, the surveys were conducted between Jan. 15 and Jan. 20, rather than between the 20th and 25th of each month as normal.
And you know how badly manipulated this survey is when the China's National Bureau of Statistics issues an additional statement admitting that "the impact of coronavirus is not fully reflected in January's PMI survey," suggesting that "future trends need to be observed."
However, if that is the case then what is more problematic is the fact the first official indicator of the Chinese manufacturing economy in 2020 signaled the nation’s factories were struggling even before the country shut down for the Lunar New Year and the coronavirus outbreak worsened.
We suspect, judging by the record collapse in (Dr.) Copper, that the manipulated-ly perfect 50.0 - neither expanding or contracting - will need to be adjusted for some sense of reality soon...

However, while the overall manufacturing survey dipped, the Steel industry PMI index surged to 47.1 from 43.1 in December.
So to sum up - China's worst ever epidemic, killing hundreds and putting 10s of thousands in hospital, shutting down factories, stores, and all transportation across the entire nation at one of its busiest most consumption-heavy times of year prompted a tiny drop in Manufacturing, a rise in the Services industry, and a surge in the Steel Industry!!!!


As a reminder, Nomura economists led by Lu Ting wrote in a recent report to clients that:

...the economic hit to China could exceed that seen during the SARS outbreak of 2003.
Gross domestic product growth could “materially drop” this quarter from the 6% pace at the end of 2019, maybe even more than the 2 percentage point deceleration seen in the second quarter of 2003.
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Just don't tell the survey respondents!!

More at: https://www.zerohedge.com/economics...celerated-coronavirus-put-tens-millions-under

 

[Swordsmyth]

[h=1]China reports outbreak of deadly bird flu among chickens in Hunan province[/h]

 

[Swordsmyth]

The epicenter of the outbreak is Wuhan, one of China’s largest manufacturing centers. Foxconn and Pegatron have operations there, as do memory manufacturers such as XMC (nor flash) and Yangtze Memory Technologies Co. (non-volatile memory).
Auto producers, such as General Motors, Honda, Volkswagen, BMW and Daimler also populate the region.

The electronics industry is poised for a cascading disruption that could change industry growth forecasts for the year. Bill McLean, president of semiconductor research firm IC Insights, said the virus has exacerbated the economic unease that has stalled semiconductor capital investment.
“Brexit, trade issues and now the coronavirus are causing global uncertainty,” he said at a Boston-based forum. “Uncertainty causes [businesses and consumers] to freeze.” Worldwide, semiconductor capital spending is forecast to decrease by roughly 6 percent this year, from $103.5 billion in 2019 to roughly $97.6 billion.
Zhang Ming, an economist at government-backed think-tank the Chinese Academy of Social Sciences, warned that the virus could push China’s economic growth below 5 per cent a year in the first quarter, reported the Financial Times. Economic consensus currently puts China’s GDP growth at 5.7 percent. That average has steadily declined since 2018, according to McLean. — EE Times
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More than 300 of the Global Top 500 companies have a presence in Wuhan, including Microsoft and Siemens. Wuhan is located in the Hubei Province.
Wuhan has 10 car factories, including those Honda, Renault, PSA and General Motors. The car industry represents around 20 percent of the city’s economy and employs 200,000 people directly and more than a million indirectly.


More at: https://www.zerohedge.com/geopolitical/global-supply-demand-shock-coronavirus

 

[Swordsmyth]

China’s official demographic data in 2019 has seriously overestimated the country’s actual birth rate and population size, a grave mistake that will lead to disastrous policymaking if leaders blindly take these numbers as fact．

My estimates show that China’s actual population size should be 1.279 billion at the end of 2019, or 121 million fewer than the officially stated 1.4 billion. The actual number of births in China last year should be about 10 million instead of 14.65 million, as reported by the National Bureau of Statistics.

It doesn’t require rocket science to see the absurdity of China’s official demographic data. For instance, the statistics bureau said China had 15.23 million births in 2018, but the Health Statistics Yearbook compiled by China’s health care authority, which cover new births in all hospitals, showed that there were only 13.62 million.

The hospital delivery rate is 99.9 per cent in China, which may account for some of the discrepancy of 1.61 million births. But this still doesn’t account for the bulk of the 1.61 million “births”.


In fact, the number of births released in the Health Statistics Yearbook is overestimated. For example, the yearbook announced that there were 14.54 million births in 2015, but the micro-census showed that only 11 million people were actually born.

The difference is because, firstly, the number of births is often inflated so that individuals and hospitals can claim more medical subsidies. Secondly, as more than 20 social benefits are tied to one’s place of birth, under the hukou household registration system, some parents buy additional birth certificates to provide a “dual citizenship” to their newborn.

According to a 2016 report by the Democracy and Legal System Times, 4,000 blank birth certificates at a hospital in Mengcheng county, Anhui province, were stolen and sold. On April 30 last year, the official website of the Commission for Discipline Inspection of Chenzhou city, Hunan province, disclosed that the administrators of two township hospitals sold hundreds of blank birth certificates.

One root problem of China’s population overstatement is the population control policy. The more “excessive” China’s population size looks, the more necessary this policy is. As such, the statistics bureau has been constantly inflating China’s population data in the past three decades. For example, census data showed that the fertility rates in 2000 and 2010 were only 1.22 and 1.18, but the statistics bureau revised them to 1.64 and 1.5 (based on the officially announced number of babies born).


Since the first-order fertility rate accounts for 71 per cent of the total fertility rate in 2000, if the total rate was 1.64, the first-order rate should be as high as 1.16 births per woman, which means there was no infertility, no DINK (double income, no kids) couples, or that many women had twins. This shows how ridiculous the official demographic data is.

China's ethnic minorities do not implement the one-child policy, so there was no need to hide births. The fertility rate of the 34 non-Muslim minorities was 1.64 in 2000 and 1.41 in 2010. The level of social development of the Han Chinese is higher than that of minorities, which means that if China implemented the same fertility policy as minorities, the fertility rates in 2000 and 2010 would only be 1.48 and 1.30; under the one-child policy, how could the rates be 1.64 and 1.5?


The 2000 census showed that only 14.08 million were born in 2000, but the statistics bureau revised it to 17.71 million. However, there were only 14.26 million secondary students in 2014, and 13.57 million people aged 15 in the 2015 micro-census.

The statistics bureau boasts that the two-child policy has boosted fertility, as the number of births in 2017 increased by 680,000 compared to 2015, of which 76 per cent were in Shandong province. The number of births in Shandong increased from 1.23 million in 2015 to 1.75 million in 2017, which is unbelievable because sales of infant-related products and the number of patients with pregnancy complications have not increased significantly.

More at: https://www.scmp.com/comment/opinio...ls-inflated-nations-birth-rate-and-population

 

[Swordsmyth]

China’s central bank said it will inject 1.2 trillion yuan ($174 billion) worth of liquidity into the markets via reverse repo operations on Monday as its stock markets prepare to reopen amid an outbreak of a new coronavirus.

Chinese authorities have pledged to use various monetary policy tools to ensure liquidity remains reasonably ample and to support firms affected by the virus epidemic, which has so far claimed 305 lives, all but one in China.
The People’s Bank of China made the announcement in a statement on Sunday, adding the total liquidity in the banking system will be 900 billion yuan higher than the same period in 2019 after the injection.
According to Reuters calculations based on official central bank data, 1.05 trillion yuan worth of reverse repos are set to mature on Monday, meaning that 150 billion yuan in net cash will be injected.


To support firms affected by the epidemic, the CSRC said companies that had expiring stock pledge agreements could apply for extensions with securities firms, and it would urge corporate bond investors to extend the maturity dates of debt.
The CSRC is also considering launching hedging tools for the A-share market to help alleviate market panic and will suspend evening sessions of futures trading starting from Monday, it said.

More at: https://www.reuters.com/article/us-...via-reverse-repos-on-february-3-idUSKBN1ZW074

 

[Swordsmyth]

As previewed on Friday and again earlier today when we noted the latest trades in China's A50 futures...

... China's reopening from the long Lunar New Year holiday was set to be ugly, and sure enough with Chinese stocks resuming trade at 9am on Monday, a wave of selling was unleashed culminating in nothing short of a bloodbath with the Shanghai Composite crashing 9% at the open, down by the most since the bursting of China's 2015 stock bubble, and wiping out 12 months worth of gains in a corona moment.

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Not even the hilarious beat in China's Manufacturing PMI (this time from Caixin), which somehow surpased expectations of a 51.0 print by the smallest amount possible at 51.1 (down from 51.5) despite a major portion of China's population under quarantine and the economy hitting a brick wall, had any impact on stocks.

What is odd is that this is happening even as China earlier in the day barred short selling, which only means the central bank made a huge oversight and should have also banned all selling altogether.
As stocks collapse the flight to safety is predictably on with 10Y Chinese bond tumbling in yield to 3%, matching the lowest yield since late 2016...

... while spiking in price.

The selloff wasn't limited just to stocks, however, with China’s benchmark iron ore contract falling by its daily limit of 8%, with copper, crude and palm oil also plunging by the maximum allowed. As Bloomberg notes, regions accounting for about 90% of copper smelting, 60% of steel production, 65% of oil refining and 40% of coal output have told firms to delay restarting operations until at least Feb. 10.
This is bad news for anyone still holding on to dreams of a Chinese economic renaissance, as the following correlation between China's macro surprise index and copper demonstrates.

China's bloodbath is taking place even as the PBOC scrambled earlier in the day to inject a gross 1.2 trillion in liquidity which however as we explained, was woefully inadequate because when netting off the 1 trillion in short-term reverse repo funds scheduled to mature on Monday, the liquidity injection amounted to a far more modest 150BN yuan, or just over $27BN.

The lack of any notable impact from China's reverse repo injection probably explains why shortly after the catastrophic open, the PBOC also cut rates on both its 7 day and 14 day-reverse repo from 2.5% to 2.4%, and from 2.65% to 2.55% respectively.

Then, as a result of the unexpected additional easing, the Yuan promptly slumped back under 7.00, potentially risking the framework of the US-China trade deal, and the reversal in the US Treasury's designation of China as a currency manipulator.

More at: https://www.zerohedge.com/markets/c...down-despite-emergency-pboc-intervention-rate

 

[Swordsmyth]

More than half of China extends shutdown over virus

 

[Swordsmyth]

Macau said Tuesday it will temporarily close all casinos as the gambling hub battles the deadly coronavirus, cutting off the lifeblood of the city's economy.
The move came as the former Portuguese colony confirmed its tenth case of the virus, which has killed more than 400 people in China, infected tens of thousands, and spread to more than 20 countries.
Chief Executive Ho Iat-seng, a pro-Beijing appointee who took office in December, said the gambling industry would close for two weeks, but warned that could be extended if the virus continues to spread.
"This is a difficult decision, but we have to do it for the health of our Macau residents," he told reporters.
He said he would meet gaming industry representatives on Tuesday afternoon and announce precise timings soon after.
Gaming stocks plunged after the announcement, with Sands China down 2.4 percent, Galaxy Entertainment down four percent and Wynn Macau down 1.9 percent in afternoon trading.
The only other time Macau has closed its casinos was in 2018, when the city was hit directly by a typhoon.
On Tuesday, health authorities announced two fresh infections -- one a woman who worked in the gaming industry.
As the only place in China where gambling is allowed, Macau's casinos account for about 80 percent of government revenue.
Some 35 million people visited the densely crowded city of just 632,000 people last year -- the vast majority mainland Chinese heading to casinos which rake in each week what Las Vegas takes in a month.
The virus has hammered the industry over what would usually be one of its busiest periods -- the Lunar New Year holidays.
The number of visitors plunged 80 percent in the past week.

More at: https://news.yahoo.com/macau-close-casinos-two-weeks-over-virus-055758037.html

 

[Swordsmyth]

(Reuters) - U.S. stock index futures jumped 1% on Tuesday, signaling a recovery for Wall Street from a sharp coronavirus-led pullback last week, with fresh intervention by China’s central bank calming investor nerves.

In a bid to cushion the economic blow of the epidemic, China injected 1.7 trillion yuan ($242.74 billion) via reverse repos on Monday and Tuesday, helping Chinese stocks reverse some losses and lifting the world equity index.
...
https://www.reuters.com/article/us-u...-idUSKBN1ZY1QG

 

[Swordsmyth]

Everything is wonderful Wednesday morning, because an unverified report from Chinese state television sparked a massive surge in equity futures as the Communist Party-controlled media intimated that the coronavirus might soon be cured.
Cure or no cure, it's clear the Chinese are going all-in on propaganda for the sake of preserving 'social cohesion'. It might sound crazy, but it's beyond the grasp of algos to process the likelihood that Beijing is simply trying to regain control of the narrative as they struggle to get in front of the inevitable reckoning with the truth.
Economists have been trying to gauge the blowback from the outbreak as the virus begins to disrupt global supply chains, but as more factories on the mainland announce extended shutdowns and delays, that's getting increasingly difficult to do.
Yesterday, we noted how Hyundai Motor Co. and its sister Kia Motors Corp. suspended production lines in South Korea after it was hit with a parts shortage from China as the virus outbreak broadened.

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Now there is a new report that could create huge problems for America's most valuable company: Apple supplier Foxconn said Wednesday that its facilities in China could take several weeks to resume full production, or at least that's what one source with insider knowledge told Reuters.
Foxconn is responsible for assembling Apple iPhones in China.


We noted Monday that Foxconn halted "almost all" of its production lines until Feb. 10.
Any production delays after that could dramatically impact Apple's iPhone shipments abroad.
Reuters' source said full resumption for production at the company's factories might not arrive until late February or early March.

More at: https://www.zerohedge.com/markets/foxconn-sees-iphone-production-resuming-late-february

 

[Swordsmyth]

Copper traders in China, the world’s largest buyer of the metal, have asked miners from Chile to Nigeria to cancel or delay shipments as the deadly coronavirus outbreak hits demand.
Multiple Chinese copper buyers said they had scrapped or postponed overseas orders by declaring force majeure since the end of January, when Beijing began to report a surge in coronavirus infections.



Copper, a barometer for the health of the global economy, is the latest commodity to fall victim to the epidemic.
China’s efforts to contain the virus, ranging from restricting highway traffic to extending the lunar new year holiday, have affected industrial activity and raised concerns about growth in the world’s second-biggest economy.
Chinese buyers of liquefied natural gas have also considered declaring force majeure, a clause that identifies natural disasters or other unavoidable catastrophes as cause for not fulfilling a contract.
“Coronavirus has had a huge impact on copper demand as downstream users [involved in processing raw copper] have stopped acquiring raw material,” said a manager at Guangzhou Zhongshan Trade, a non-ferrous metal trading firm in southern China that focuses on copper and antimony.
Guangzhou Zhongshan this week asked suppliers in Chile and Somalia to delay shipments of 500 tonnes of copper worth about Rmb25m ($3.57m) for at least a week. It has also cancelled a preliminary contract with a seller in Somalia and has stopped placing new orders.
“The epidemic is not just a China issue, it is a global problem,” the manager said, adding that its customers had not objected to its decision.
Business activity at Guangzhou’s port, one of the biggest in China for commodities trading, has plunged with fewer than a third of workers on duty, the manager added.
In the coming weeks at least a dozen other Chinese copper buyers could use force majeure to try to renegotiate copper import contracts, said traders in the city. Guangzhou is about 1,000km south of Wuhan, the outbreak’s centre.
Copper users, ranging from car companies to home appliance makers, face a sharp drop in sales if the outbreak continues to worsen.
Consultancy Wood Mackenzie said demand for copper-related products could suffer “further disruptions” after more than a dozen provinces imposed restrictions on people’s movements in an attempt to contain the disease.

More at: https://dnyuz.com/2020/02/07/chinese-copper-traders-declare-force-majeure/

 

[Swordsmyth]

Apple's main iPhone assembler Foxconn has told employees not to return to work at its Shenzhen facility in China when the extended Lunar New Year break ends on February 10, according to a memo obtained by Bloomberg.

"To safeguard everyone's health and safety and comply with government virus prevention measures, we urge you not to return to Shenzhen," Foxconn wrote in a text message sent to employees. "We'll update you on the situation in the city. The company will protect everyone's work-related rights and interests in the duration. As for the happy reunion date in Shenzhen, please wait for further notice."​

Foxconn has reportedly halted almost all of its production in China as the government and businesses attempt to contain the coronavirus outbreak in the country, where more than 31,000 cases have been reported so far.

It's unclear whether the Shenzhen policy extends to all employees or to Foxconn's other facilities. Earlier this week, the *iPhone* manufacturer said it planned to resume full-scale production by February 10. Other Apple suppliers such as Quanta Computer, Inventec and LG Display also said they would go back to work next week in China, but sticking to that plan seems less certain by the day.

More at: https://www.macrumors.com/2020/02/07/foxconn-tells-staff-keep-away-from-shenzen/

 

[Swordsmyth]

For years, China has been the biggest buyer for farmers in Thailand, Myanmar and Vietnam, Nikkei reports. Now, with the coronavirus closing down importers and weighing on demand, farmers are being forced to instead sell their products in local markets for a serious discount.

"The coronavirus has undoubtedly hurt business," said Maung Phyu, a 48-year-old farmer north of Yangon, in an interview with the Nikkei Asian Review. "There aren't many things the [Myanmar] government can do for us in this situation."
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Over the last decade, as China's population boomed, the county became the biggest buyer of fruits and vegetables from its neighbors. Thailand and Vietnam now export about 25% of their agricultural products to China, while Myanmar sends more than 50% of its harvest according to ASEANStats.

In the poorest, most rural parts of these three countries, farming is critical: without it, local economies could collapse.
One farmer said he sent dozens of truckloads of fruit to the border with China's Yunnan Province every day during the harvest season. Now, those shipments have stopped, while some have spoiled after being unexpectedly held up at the border.

Three years ago, Maung Phyu contracted with several Chinese traders to supply watermelons and muskmelons. Almost every day during the harvest season, he would send truckloads of fruit to Muse, a border town in China's southernmost Yunnan Province. He sent 70 shipments in December followed by 120 in January.
But now all shipments have stopped, and even transporting goods to the border is discouraged. "We were told not to send our produce to the border, as there was nobody to buy it," said Maung Phyu.
Fishery products like crabs and eels are also being held up, said a commerce ministry official in Muse.
The situation has forced Maung Phyu to sell at domestic markets in Yangon, where watermelons go for only 3,000 kyat to 5,000 kyat ($2.00 to $3.50) each, compared with 10,000 kyat on the export market. Muskmelons also only fetch 50% to 70%. "Many farmers haven't harvested their crops, and when they do they'll have nowhere to bring them," he said.
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Since millions of Chinese have been ordered not to leave their homes, shopping for fresh fruit and vegetables has become far more difficult.

He said the lockdowns in Chinese cities have disrupted logistics while tighter border inspections have lengthened wait times, causing fruit to spoil before it gets to market. "Chinese have been ordered to stay home, and that means no shoppers," said Jira. "And if they manage to go out, they only buy necessities, not durian."
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Thailand's durian farmers, who recently expanded their operations following a spike in demand for durian in China, are being left in the lurch.

More at: https://www.zerohedge.com/geopoliti...otting-chinas-border-outbreak-hammers-farmers

 

[Swordsmyth]

Soon the only food that will be affordable in China, is coronabat stew.
With over 400 million people across dozens of Chinese cities living in lock down as a result of the Coronavirus pandemic, crippling global supply chains and grinding China's economy to a halt, it is easy to forget that China has been battling another major viral epidemic for the past two years: namely the African Swing Fever virus, aka "pig ebola" which killed off over half of China's pig population in the past year, sending pork prices soaring, and unleashing a tidal wave of inflation.
Well, moments ago, the world got a stark reminder of this when China reported that in January, its CPI jumped by whopping 5.4% Y/Y, the highest print in nine years...

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... driven by a surge in pork prices, which reversed a rare drop in December when the slid by 5.6%, rising 8.5% in just ont month, and a record 116% compared to a year ago.

This unprecedented surge in pork CPI meant that China's food CPI rose a record 20.6% in January, also the highest on record, as China's population, now ordered to live under self-imposed quarantine, suddenly finds it can no longer afford to buy food .

Needless to say, this is suddenly a major problem for China, whose central bank has in the past two weeks unleashed an unprecedented liquidity tsunami, including the biggest ever reverse repo injection...

... in hopes of stabilizing the stock market. Well, oops, because some of this liquidity now appears to be making its way into the broader economy, and is making already scarce food (aside from bat stew of course) even more unaffordable, and the already depressed and dejected Chinese population even more hungry, and angry.


More at: https://www.zerohedge.com/economics...blem-soaring-food-prices-put-lid-central-bank

 

[Swordsmyth]

​

Bloomberg cited a new report via China Merchants Securities (CMSC) that said new apartment sales crashed 90% in the first week of February over the same period last year. Sales of existing homes in 8 cities plunged 91% over the same period.
"The sector is bracing for a worse impact than the 2003 SARS pandemic," said Bai Yanjun, an analyst at property-consulting firm China Index Holdings Ltd. "In 2003, the home market was on a cyclical rise. Now, it's already reeling from an adjustment."
Long before the coronavirus outbreak, China's housing market has been on shaky grounds amid declining demand, stricter mortgage requirements, and price discounts.
The latest shock: two-thirds of China's economy has come to a standstill, could generate enough pessimism to pop the country's massive housing bubble.

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After all, coronavirus is a mass distraction from the overall domestic problems the Communist Party of China (CPC) faces.
The CPC failed to stimulate the economy last year, with credit impulse not turning up as expected. The virus outbreak has allowed the CPC to scapegoat the slowdown and the inevitable crash.

"…China's ability to stimulate its economy is now virtually nil, since China's record debt load has now made it virtually impossible to push the country's credit impulse higher," we noted last week.
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Real estate transactions have been forbidden in many cities. This means fire sales could be seen once selling restrictions end.
E-House China Enterprise Holdings Ltd.'s research institute said four units per day were being sold in Beijing last week, and this is down from several hundred per day during the same period in the previous year.
China International Capital Corp. analyst Eric Zhang said demand could pick back up in April, assuming the virus outbreak is under control.


However, residents in major cities are frightened by the virus outbreak and how easily it spreads in apartment buildings.

More at: https://www.zerohedge.com/markets/worse-impact-sars-china-home-sales-crash-first-week-february

 

[pmbug]

OPEC has dramatically lowered its forecast for oil demand growth this year, citing China's coronavirus outbreak as the "major factor" behind its decision.

In a closely-watched monthly report published Wednesday, the Middle East-dominated producer group downwardly revised its outlook for global oil demand growth to 0.99 million barrels per day (bpd) in 2020. That's down by 0.23 million bpd from the previous month's estimate.
...

https://www.cnbc.com/2020/02/12/ope...cted-to-weaken-oil-demand-growth-in-2020.html

OPEC says oil demand is going to fall roughly 20% of baseline due to impacts of coronavirus on China (and the world).

...
The coronavirus outbreak in China has generated economic waves that are rocking global commodities markets and disrupting the supply networks that act as the backbone of the global economy.

“We’re seeing a rippling out,” said Ed Morse, global head of commodities research at Citigroup in New York. “And we don’t see it stopping.”

Prices for key industrial raw materials such as copper, iron ore, nickel, aluminum and liquid natural gas have plummeted since the virus emerged. Currencies of countries that export these goods at high rates, including Brazil, South Africa and Australia, are near their lowest levels in recent memory. And manufacturers, mining companies and commodity producers of all stripes are weighing whether they will be forced to cut back on production for fear of adding to a growing inventory glut.

The woes of the commodities markets — arguably the worst-performing asset in financial markets this year — reflect the basic reality that China’s industry-heavy economy is the most important consumer of raw materials on earth.
...
Commodities markets have tumbled as those factories idled. Iron ore is down more than 10 percent this year. Copper is down about 8 percent, as is nickel, a key ingredient for stainless steel. Zinc and aluminum are both down more than 5 percent in 2020.
...
One of China’s largest importers of liquefied natural gas, China National Offshore Oil Corporation, or CNOOC, was one of the entities to invoke a “force majeure” clause, according to multiple news reports. Asian gas prices tumbled in response; benchmark prices for North Asian liquid natural gas are down more than 30 percent in 2020.

Copper prices have also been tested as China’s construction and automotive industries have stalled. BHP said it was monitoring the situation and was “working closely with our copper customers” as they returned from the holiday.

For some, the decline in copper is an ominous sign: Copper has long been considered an unofficial leading indicator of the direction of the global economy, because of its close connection to the industrial sector.

On Tuesday, the Federal Reserve chair, Jerome H. Powell, told House Financial Services Committee members that the central bank was “closely monitoring the emergence of the coronavirus, which could lead to disruptions in China that spill over to the rest of the global economy.”

Whether the downturn is a blip or a serious shock is as much a question of epidemiology as economics.

If the spread of the virus starts to slow — as many expect it will — commodities will most likely rebound as production returns to normal and inventories that have been built up over the past few weeks gradually shrink.

“A lot of what’s happened in some of these commodity prices is more speculation that it gets worse before it gets better,” said John LaForge, the head of real asset strategy at Wells Fargo Investment Institute. “My guess is that commodity prices bounce pretty quickly.”

Others are not so sure.

Mr. Morse, at Citigroup, said several key markets — like crude oil — had already been showing softness, suggesting that the global economy was weak even before the virus hit. That could complicate any quick rebound for commodities prices.

“The market has been thinking that there’s going to be a V-shaped recovery at some point,” he said. “And we don’t think that’s in the cards.”

https://www.nytimes.com/2020/02/11/business/china-coronavirus-commodities.html

Industrial commodities are hardest hit from slowdowns in China's manufacturing.

Chinese President Xi Jinping warned top officials last week that efforts to contain the new coronavirus had gone too far, threatening the country’s economy, sources told Reuters, days before Beijing rolled out measures to soften the blow.

With growth at its slowest in nearly three decades, China’s leaders seem eager to strike a balance between protecting an already-slowing economy and stamping out an epidemic that has killed more than 1,000 people and infected more than 40,000.

After reviewing reports on the outbreak from the National Development and Reform Commission (NDRC) and other economic departments, Xi told local officials during a Feb 3 meeting of the Politburo’s Standing Committee that some of the actions taken to contain the virus are harming the economy, said two people familiar with the meeting, who declined to be named because of the sensitivity of the matter.

He urged them to refrain from “more restrictive measures”, the two people said.
...

https://www.reuters.com/article/us-...irus-could-hurt-economy-sources-idUSKBN2050JL

Turn those machines back on!

 

[ghengis86]

​

Bloomberg cited a new report via China Merchants Securities (CMSC) that said new apartment sales crashed 90% in the first week of February over the same period last year. Sales of existing homes in 8 cities plunged 91% over the same period.
"The sector is bracing for a worse impact than the 2003 SARS pandemic," said Bai Yanjun, an analyst at property-consulting firm China Index Holdings Ltd. "In 2003, the home market was on a cyclical rise. Now, it's already reeling from an adjustment."
Long before the coronavirus outbreak, China's housing market has been on shaky grounds amid declining demand, stricter mortgage requirements, and price discounts.
The latest shock: two-thirds of China's economy has come to a standstill, could generate enough pessimism to pop the country's massive housing bubble.

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After all, coronavirus is a mass distraction from the overall domestic problems the Communist Party of China (CPC) faces.
The CPC failed to stimulate the economy last year, with credit impulse not turning up as expected. The virus outbreak has allowed the CPC to scapegoat the slowdown and the inevitable crash.

"…China's ability to stimulate its economy is now virtually nil, since China's record debt load has now made it virtually impossible to push the country's credit impulse higher," we noted last week.
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Real estate transactions have been forbidden in many cities. This means fire sales could be seen once selling restrictions end.
E-House China Enterprise Holdings Ltd.'s research institute said four units per day were being sold in Beijing last week, and this is down from several hundred per day during the same period in the previous year.
China International Capital Corp. analyst Eric Zhang said demand could pick back up in April, assuming the virus outbreak is under control.


However, residents in major cities are frightened by the virus outbreak and how easily it spreads in apartment buildings.

More at: https://www.zerohedge.com/markets/worse-impact-sars-china-home-sales-crash-first-week-february

I was perplexed when I first heard this route, but I read that the “transmission through apartment pipes” has a lot to do with the lack of S- and P-traps and proper venting of plumbing. Makes more sense now bc improper venting and use of traps can allow sewer gases (and any other airborne particles) to infiltrate the living space. I don’t know the the plumbing codes in China/Asia and if this is true, but it would at least help explain the theory.

 

[ghengis86]

14+ plus new cases
240+ new deaths in Hubei alone

 

[Swordsmyth]

14+ plus new cases
240+ new deaths in Hubei alone

One big reason China's #COVID19 new case numbers seem to be slowing down is testing has in places stopped:
"Huanggang City has id'ed 10 instits to conduct testing, w/a daily testing capacity of 900…The previous stocks were all tested on February 9."https://t.co/m1Bs3JuGsQ
— Laurie Garrett (@Laurie_Garrett) February 12, 2020

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Who knows what the real numbers are?