Wednesday, 02 November 2011
The international rating agency Moody's has downgraded its outlook for the European steel industry to ‘negative' from ‘stable'.
Moody's stated that it expects steel demand in the EU-27 to decrease by up to four percent in the coming 12 months due to economic uncertainty caused by the European debt crisis, as well as due to weak construction and automotive markets.
According to Moody's, in 2012 profitability of European steel companies will "be no worse than 2010" and demand is expected to improve.
Tags: European Union , steelmaking , economics
Showing posts with label European debt crisis. Show all posts
Showing posts with label European debt crisis. Show all posts
Wednesday, November 2, 2011
Saturday, October 29, 2011
Preventing financial crisis "true test" for G20: Zoellick
Sat, Oct29, 2011
WASHINGTON, (Xinhua) -- The true test for the G20 will be whether it can prevent a future financial crisis, World Bank Group President Robert Zoellick said Friday ahead of the upcoming G20 summit in Cannes.
"The world economy is hobbled not only by large deficits and troubled banks, but by joblessness and slow growth," Zoellick noted in an article carried on the website of the Washington Post Friday.
At the G20 summit to be held in France this coming week, the euro zone will present its new plan to recapitalize and strengthen European Union banks, using its new European Financial Stability Facility to enable Italy and Spain to roll over government debts, while assisting Greece, Portugal and Ireland, and easing the debt load on Greece to give it a chance of recovery, he added.
"Developing countries' economic growth has helped compensate for the lackluster performance of developed nations, but they are hardly immune to the shocks coming out of industrialized countries, " Zoellick noted.
He warned that all nations must at least agree "not to do dumb things" which includes a retreat to protectionism or trade wars.
The G20 also must help offset the damage to the poorest countries, which do not sit at the G20 table, Zoellick urged.
(sourced Xinhua)
WASHINGTON, (Xinhua) -- The true test for the G20 will be whether it can prevent a future financial crisis, World Bank Group President Robert Zoellick said Friday ahead of the upcoming G20 summit in Cannes.
"The world economy is hobbled not only by large deficits and troubled banks, but by joblessness and slow growth," Zoellick noted in an article carried on the website of the Washington Post Friday.
At the G20 summit to be held in France this coming week, the euro zone will present its new plan to recapitalize and strengthen European Union banks, using its new European Financial Stability Facility to enable Italy and Spain to roll over government debts, while assisting Greece, Portugal and Ireland, and easing the debt load on Greece to give it a chance of recovery, he added.
"Developing countries' economic growth has helped compensate for the lackluster performance of developed nations, but they are hardly immune to the shocks coming out of industrialized countries, " Zoellick noted.
He warned that all nations must at least agree "not to do dumb things" which includes a retreat to protectionism or trade wars.
The G20 also must help offset the damage to the poorest countries, which do not sit at the G20 table, Zoellick urged.
(sourced Xinhua)
Wednesday, October 26, 2011
China pressures EU on debt, defends yuan
Wednesday 26 October 2011
BEIJING (Reuters) - China hopes the European Union takes effective measures to restore market confidence in tackling its debt crisis, the Foreign Ministry said on Wednesday, while also again defending the yuan's exchange rate.
Leaders of the 17 European countries using the euro will meet later on Wednesday to try to pin down a comprehensive response to the escalating sovereign debt crisis.
"I hope that the measures the EU adopts can effectively counter debt problems that some countries are facing and help in recovering market confidence and promote stability in Europe," Chinese Foreign Ministry spokeswoman Jiang Yu said.
Doubts are emerging as to whether the plan, intended to reduce Greece's debt burden, fortify European banks to withstand bond losses, and scale up the euro zone rescue fund to prevent market contagion, will yield concrete steps.
China already has an estimated 600 billion euro ($834 billion) exposure to euro zone debt, courtesy of the 25 percent or so of its $3.2 trillion of foreign exchange reserves that analysts believe to be invested in euro-denominated assets.
China's relative lack of options on where to store its vast reserve of foreign exchange wealth give it strong reasons to press Europe to surmount divisions, contain the debt crisis and thereby protect Beijing 's stake in its biggest trade partner.
Klaus Regling, head of the European Financial Stability Facility, will visit Beijing on Friday, the EU's delegation to China announced.
The euro bloc's crisis has already taken a toll on Chinese exports, which grew at their slowest pace in seven months in September . Exports were a net drag on China's economic growth in the first nine months of this year.
China's top leaders have voiced regular support for European efforts to solve the debt crisis, though many analysts now say there are better ways for China to support Europe and its own economy than simply buying up high risk debt from euro zone governments struggling to stay solvent.
On a second economic issue that has caused political headaches for China, the value of its yuan currency, also known as the renminbi, spokeswoman Jiang said its rapid appreciation would not be good for the world economy.
The U.S. Senate has passed a bill that aims to pressure Beijing to raise the value of the yuan more quickly. The yuan has risen about 3.6 percent so far this year and 7.4 percent since it was depegged from the dollar in June 2010.
"Our policies fit our national situation and are beneficial to the stability and development of the global economy," Jiang said.
"Demanding the renminbi appreciate drastically over a short period of time is inappropriate. A slowdown in China's economy would decrease global demand, and would be detrimental to the world economy."
(source Reuters)
BEIJING (Reuters) - China hopes the European Union takes effective measures to restore market confidence in tackling its debt crisis, the Foreign Ministry said on Wednesday, while also again defending the yuan's exchange rate.
Leaders of the 17 European countries using the euro will meet later on Wednesday to try to pin down a comprehensive response to the escalating sovereign debt crisis.
"I hope that the measures the EU adopts can effectively counter debt problems that some countries are facing and help in recovering market confidence and promote stability in Europe," Chinese Foreign Ministry spokeswoman Jiang Yu said.
Doubts are emerging as to whether the plan, intended to reduce Greece's debt burden, fortify European banks to withstand bond losses, and scale up the euro zone rescue fund to prevent market contagion, will yield concrete steps.
China already has an estimated 600 billion euro ($834 billion) exposure to euro zone debt, courtesy of the 25 percent or so of its $3.2 trillion of foreign exchange reserves that analysts believe to be invested in euro-denominated assets.
China's relative lack of options on where to store its vast reserve of foreign exchange wealth give it strong reasons to press Europe to surmount divisions, contain the debt crisis and thereby protect Beijing 's stake in its biggest trade partner.
Klaus Regling, head of the European Financial Stability Facility, will visit Beijing on Friday, the EU's delegation to China announced.
The euro bloc's crisis has already taken a toll on Chinese exports, which grew at their slowest pace in seven months in September . Exports were a net drag on China's economic growth in the first nine months of this year.
China's top leaders have voiced regular support for European efforts to solve the debt crisis, though many analysts now say there are better ways for China to support Europe and its own economy than simply buying up high risk debt from euro zone governments struggling to stay solvent.
On a second economic issue that has caused political headaches for China, the value of its yuan currency, also known as the renminbi, spokeswoman Jiang said its rapid appreciation would not be good for the world economy.
The U.S. Senate has passed a bill that aims to pressure Beijing to raise the value of the yuan more quickly. The yuan has risen about 3.6 percent so far this year and 7.4 percent since it was depegged from the dollar in June 2010.
"Our policies fit our national situation and are beneficial to the stability and development of the global economy," Jiang said.
"Demanding the renminbi appreciate drastically over a short period of time is inappropriate. A slowdown in China's economy would decrease global demand, and would be detrimental to the world economy."
(source Reuters)
Monday, October 24, 2011
Falling iron ore prices surprise market players
Monday, 24 October 2011
Spot iron ore prices have slid to their lowest in a year and are set to post their biggest weekly decline in 15 months. The decline in iron ore prices may worsen as the economy slows in China, the largest importer, as the European debt crisis persists and as Australian miners BHP Billiton (BHP) and Rio Tinto Group increase production, analysts have said. According to Macquarie Group analyst Bonnie Liu in Shanghai, iron ore for immediate delivery may drop to $140/mt by the end of the current year.
Weaker demand for steel in China, the world's biggest consumer and producer, has dragged down steel prices and slashed the appetite for iron ore, the key steelmaking raw material. However, iron ore prices have fallen so steeply and so rapidly in the past two weeks, surprising many market players, that most Chinese mills have opted to delay purchases and wait until prices stabilize.
Tags: iron ore , raw mat , steelmaking , steel futures
source steelorbis
Spot iron ore prices have slid to their lowest in a year and are set to post their biggest weekly decline in 15 months. The decline in iron ore prices may worsen as the economy slows in China, the largest importer, as the European debt crisis persists and as Australian miners BHP Billiton (BHP) and Rio Tinto Group increase production, analysts have said. According to Macquarie Group analyst Bonnie Liu in Shanghai, iron ore for immediate delivery may drop to $140/mt by the end of the current year.
Weaker demand for steel in China, the world's biggest consumer and producer, has dragged down steel prices and slashed the appetite for iron ore, the key steelmaking raw material. However, iron ore prices have fallen so steeply and so rapidly in the past two weeks, surprising many market players, that most Chinese mills have opted to delay purchases and wait until prices stabilize.
Tags: iron ore , raw mat , steelmaking , steel futures
source steelorbis
Sunday, October 16, 2011
Angry Europeans stage their own "Occupy Wall Street"
Oct16, 2011 | sourced Xinhua
ROME (Xinhua) -- The Big Apple residents this Saturday saw a loud echo of the "Occupy Wall Street" movement in where many of their ancestors came, as ever-tightening austerity measures to contain the debt crisis have made life harder across the Europe.
Rome witnessed a turbulent day as protests turned violent in many corners of the city. Police used tear gas and water cannons to disperse tens of thousands of protesters. Over 70 people were injured in the clashes.
The mood around the San Jiovanni square turned ugly when protesters torch cars and smashed windows. Large columns of smoke could be seen far away from the square.
At least a dozen or so police cars were seen passing through the area.
Witnesses said angry students have torn down railings and advertisement signs by the streets. They armed themselves with the iron bars obtained at the site to force their ways forward.
At the Colosseum, one of the greatest works of Roman architecture, the police went into clashes with protesting students, and the youngsters attacked the policemen with stones.
In London, thousands of people gathered outside St Paul's Cathedral in central London.
The protestors originally planned to assemble in front of St Paul's Cathedral and then march towards the City of London to "occupy" the Square Mile.
Yet the police immediately blockaded all the exits of lanes and streets nearby the Cathedral, leaving protestors stuck inside "walls of policemen."
"Our Streets!", "We have the right to strike!" a lot of protestors shouted, holding up banners with words like "No cuts," "Fight for every job,", "Bankers got bailout We got sold out," etc.
The "Occupy London" website said the movement is aimed at addressing social and economic injustice in Britain and beyond, as "part of a global movement for real democracy."
Tens of thousands of people flooded streets for demonstrations across Germany.
In capital Berlin, the demonstration started from the Alexanderplatz, a major shopping mall in the eastern city, and then targeted the Chancellor's Office and the Federal Parliament. Thousands of people sit in the square between the two buildings.
Police said some 5,000 people attended a gathering in front of the ECB (The European central bank) building in Frankfurt, a major city in Germany and euro zone's financial center.
Although the Netherlands has one of the lowest unemployment rates of Europe and fares economically well, around 1000 people occupied the financial heart of Amsterdam, which symbolizes for the angry Dutch people the social and economic inequality, corporate greed, and the influence of corporate money on government.
"I think what we all share is the idea that we have one crisis after the other because the model that we have now is based on greed," former Minister of Culture Ronald Plasterk, who is also participating in this demonstration, told Xinhua.
Protests also took place in nine Portuguese cities, with the largest one in Lisbon involving tens of thousands of people.
Else where in Europe, demonstrators swept cities in Sweden, Finland, Hungary, Belgium, Norway and Greece.
In Brussel, the European Union's capital, more than 6,000 protesters marched all the way from the north station to the Cinquantenaire Park, calling for change and better life.
"Starting from the global financial crisis in 2008, Europe has been living in crisis for three years, and policy makers still cannot come with suitable solutions, thus social crisis comes as no surprise," said Rym Ayadi, senior researcher at the Brussels-based Center for European Policy Studies.
Still, experts believe that Saturday's march would hardly have any instant, practical results, as many of the protesters had different demands despite their "common anger".
ROME (Xinhua) -- The Big Apple residents this Saturday saw a loud echo of the "Occupy Wall Street" movement in where many of their ancestors came, as ever-tightening austerity measures to contain the debt crisis have made life harder across the Europe.
Rome witnessed a turbulent day as protests turned violent in many corners of the city. Police used tear gas and water cannons to disperse tens of thousands of protesters. Over 70 people were injured in the clashes.
The mood around the San Jiovanni square turned ugly when protesters torch cars and smashed windows. Large columns of smoke could be seen far away from the square.
At least a dozen or so police cars were seen passing through the area.
Witnesses said angry students have torn down railings and advertisement signs by the streets. They armed themselves with the iron bars obtained at the site to force their ways forward.
At the Colosseum, one of the greatest works of Roman architecture, the police went into clashes with protesting students, and the youngsters attacked the policemen with stones.
In London, thousands of people gathered outside St Paul's Cathedral in central London.
The protestors originally planned to assemble in front of St Paul's Cathedral and then march towards the City of London to "occupy" the Square Mile.
Yet the police immediately blockaded all the exits of lanes and streets nearby the Cathedral, leaving protestors stuck inside "walls of policemen."
"Our Streets!", "We have the right to strike!" a lot of protestors shouted, holding up banners with words like "No cuts," "Fight for every job,", "Bankers got bailout We got sold out," etc.
The "Occupy London" website said the movement is aimed at addressing social and economic injustice in Britain and beyond, as "part of a global movement for real democracy."
Tens of thousands of people flooded streets for demonstrations across Germany.
In capital Berlin, the demonstration started from the Alexanderplatz, a major shopping mall in the eastern city, and then targeted the Chancellor's Office and the Federal Parliament. Thousands of people sit in the square between the two buildings.
Police said some 5,000 people attended a gathering in front of the ECB (The European central bank) building in Frankfurt, a major city in Germany and euro zone's financial center.
Although the Netherlands has one of the lowest unemployment rates of Europe and fares economically well, around 1000 people occupied the financial heart of Amsterdam, which symbolizes for the angry Dutch people the social and economic inequality, corporate greed, and the influence of corporate money on government.
"I think what we all share is the idea that we have one crisis after the other because the model that we have now is based on greed," former Minister of Culture Ronald Plasterk, who is also participating in this demonstration, told Xinhua.
Protests also took place in nine Portuguese cities, with the largest one in Lisbon involving tens of thousands of people.
Else where in Europe, demonstrators swept cities in Sweden, Finland, Hungary, Belgium, Norway and Greece.
In Brussel, the European Union's capital, more than 6,000 protesters marched all the way from the north station to the Cinquantenaire Park, calling for change and better life.
"Starting from the global financial crisis in 2008, Europe has been living in crisis for three years, and policy makers still cannot come with suitable solutions, thus social crisis comes as no surprise," said Rym Ayadi, senior researcher at the Brussels-based Center for European Policy Studies.
Still, experts believe that Saturday's march would hardly have any instant, practical results, as many of the protesters had different demands despite their "common anger".
Tuesday, August 16, 2011
Europe crisis won't hit dry bulk trade
Tuesday, 16 August 2011
Business from China and India is robust enough for shippers such as Paragon Shipping, Box Ships Inc and Seanergy Maritime Holdings not to be losing sleep over financial crises in the United States and Europe, executives said.
Brokers, including Intermodal and Wells Fargo Securities, have said the market volatility sparked by Standard & Poor's US sovereign debt rating cut and Europe's debt crisis could trip the global economy into a double-dip recession and land a body-blow to dry bulk trade and the shipping sector generally.
Aristides Pittas, CEO at Euroseas, said the market turmoil could slow growth in global and US gross domestic product.
'This is something we will continue to monitor closely as dry bulk and container trades closely follow GDP developments,' he said on a conference call.
The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities such as coal and iron ore, has declined by nearly a third this year as growth in demand to ship commodities has lagged the increase in vessel supply.
Companies do not expect much short-term impact on the dry bulk market.
'The dry bulk market is not affected by what we see today . . . the instability in the United States and Europe,' said Michael Bodouroglou, founder and CEO of Paragon Shipping, a dry bulk shipper. 'This is because the dry bulk market is primarily driven by the emerging economies . . . China, India and others.'
China's exports hit a record in July and the world's No 2 economy's imports of raw materials such as copper and iron ore saw strong gains. The recent fall in global commodity prices is expected to result in more Chinese buying.
Mr Bodouroglou, who also heads container shipper Box Ships, said the dry bulk market would remain challenging for the next couple of years. The business of transporting containers, however, looks much healthier.
'We're looking at buying container ships because we believe this sector is in a different point in the cycle,' he told Reuters by telephone from Greece. 'The order book is much healthier and demand is being driven by Asian economies.'
Growing overcapacity in world shipping is setting the market on course for a fresh crisis over the next two years, and weaker operators will fail, the head of ship financier DVB Bank said.
Seanergy Maritime CEO Dale Ploughman said the market uncertainty could make it tougher for companies to access funds.
'The dry bulk sector is not the flavour of the day and banks have their own problems and will be very picky on who they're prepared to support,' he told Reuters.
Mr Bodouroglou warned that some companies may default on loans, although he added he did not see any liquidity issue at his companies. 'There are companies which have breached covenants, and they may breach covenants,' he said.
sourced Reuters
Business from China and India is robust enough for shippers such as Paragon Shipping, Box Ships Inc and Seanergy Maritime Holdings not to be losing sleep over financial crises in the United States and Europe, executives said.
Brokers, including Intermodal and Wells Fargo Securities, have said the market volatility sparked by Standard & Poor's US sovereign debt rating cut and Europe's debt crisis could trip the global economy into a double-dip recession and land a body-blow to dry bulk trade and the shipping sector generally.
Aristides Pittas, CEO at Euroseas, said the market turmoil could slow growth in global and US gross domestic product.
'This is something we will continue to monitor closely as dry bulk and container trades closely follow GDP developments,' he said on a conference call.
The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities such as coal and iron ore, has declined by nearly a third this year as growth in demand to ship commodities has lagged the increase in vessel supply.
Companies do not expect much short-term impact on the dry bulk market.
'The dry bulk market is not affected by what we see today . . . the instability in the United States and Europe,' said Michael Bodouroglou, founder and CEO of Paragon Shipping, a dry bulk shipper. 'This is because the dry bulk market is primarily driven by the emerging economies . . . China, India and others.'
China's exports hit a record in July and the world's No 2 economy's imports of raw materials such as copper and iron ore saw strong gains. The recent fall in global commodity prices is expected to result in more Chinese buying.
Mr Bodouroglou, who also heads container shipper Box Ships, said the dry bulk market would remain challenging for the next couple of years. The business of transporting containers, however, looks much healthier.
'We're looking at buying container ships because we believe this sector is in a different point in the cycle,' he told Reuters by telephone from Greece. 'The order book is much healthier and demand is being driven by Asian economies.'
Growing overcapacity in world shipping is setting the market on course for a fresh crisis over the next two years, and weaker operators will fail, the head of ship financier DVB Bank said.
Seanergy Maritime CEO Dale Ploughman said the market uncertainty could make it tougher for companies to access funds.
'The dry bulk sector is not the flavour of the day and banks have their own problems and will be very picky on who they're prepared to support,' he told Reuters.
Mr Bodouroglou warned that some companies may default on loans, although he added he did not see any liquidity issue at his companies. 'There are companies which have breached covenants, and they may breach covenants,' he said.
sourced Reuters
Tuesday, August 9, 2011
Iron Ore-Shanghai rebar futures fall over 4 pct in commodities selloff
Tue Aug 9, 2011
* Shanghai rebar futures fall to lowest since March 24
* Investors remain wary over global economic outlook
* Iron ore prices hold firm amid supply tightness
* Key global iron ore indexes mixed on Monday
By Ruby Lian and Manolo Serapio Jr
* Shanghai rebar futures fall to lowest since March 24
* Investors remain wary over global economic outlook
* Iron ore prices hold firm amid supply tightness
* Key global iron ore indexes mixed on Monday
By Ruby Lian and Manolo Serapio Jr
SHANGHAI/SINGAPORE, Aug 9 (Reuters) - China rebar futures fell more than 4 percent on Tuesday to the lowest since March as investors dumped riskier assets in a global rout triggered by fears that political leaders are failing to tackle debt crises in the United States and Europe.
The most active January rebar contract on the Shanghai Futures Exchange SRBc6 fell as low as 4,558 yuan ($708) per tonne, the weakest since March 24, tracking Asian equities and other commodities, but the declined was trimmed to 0.84 percent by the midday break from the previous close.
"The Chinese market remains panicked by the overnight slump in global markets caused by spreading worries about the U.S. and European crises. Rebar will stay vulnerable unless the two regions work out how to ease the crisis properly," said China's Orient Futures analyst Wang Dezhi.
The U.S. downgrade by Standard & Poor's late on Friday continued to spook global investors and raise market concerns that the world's largest economy is sliding into recession while Europe is facing an ever-worsening sovereign debt crisis.
Asian stock markets nosedived on Tuesday and the Swiss franc held near a record high against the dollar and euro in Asia, having surged as a crisis of confidence gripped investors. .
London copper hit an eight-month low on Tuesday, while base metals futures on the Shanghai Futures Exchange also fell significantly, with benchmark Shanghai copper tumbling 6 percent to the downward trade limit [ID : nB9E7IC001]
IRON ORE LESS VOLATILE
China's spot iron ore market has remained less affected by growing fears over a global economic downturn than other commodities, with offers holding firm on Tuesday as supply from India, the world's biggest supplier of spot iron ore, has remained tight.
"There is panic in the iron ore market too, but prices are mainly supply-driven and thus almost steady, unlike copper or rebar," said an iron ore trader in Shenzhen.
Exports from a key producing region of India's Karnataka state have not yet resumed, compounded by a ban on mining in its Bellary region, which continues to buoy market fundamentals, particularly during its monsoon season.
Australia, the world's top iron ore supplier, expects demand to continue to grow, particularly from Asia, despite global market turmoil.
Quotes for Indian 63.5/63 iron ore stood unchanged at $185-187 per tonne, including freight, on Tuesday, while offers for 62-grade Newman fines from Australia were steady at $181-183 per tonne.
Key global iron ore indexes, tracking spot deals in China and used by global miners to settle contract prices, were mixed again on Monday.
The Steel Index's 62-percent iron ore reference price .IO62-CNI=SI rose 10 cents again to $178.1 per tonne, its highest since May 17, while Metal Bulletin Iron Ore Index .IO62-CNO=MB rose 32 cents to $177.77 per tonne, close to its highest in nearly two months hit last Thursday.
Platts 62-percent index IODBZ00-PLT fell half a dollar to $177.5 per tonne on Monday. ($1 = 6.436 yuan)
(sourced Thomson Reuters)
The most active January rebar contract on the Shanghai Futures Exchange SRBc6 fell as low as 4,558 yuan ($708) per tonne, the weakest since March 24, tracking Asian equities and other commodities, but the declined was trimmed to 0.84 percent by the midday break from the previous close.
"The Chinese market remains panicked by the overnight slump in global markets caused by spreading worries about the U.S. and European crises. Rebar will stay vulnerable unless the two regions work out how to ease the crisis properly," said China's Orient Futures analyst Wang Dezhi.
The U.S. downgrade by Standard & Poor's late on Friday continued to spook global investors and raise market concerns that the world's largest economy is sliding into recession while Europe is facing an ever-worsening sovereign debt crisis.
Asian stock markets nosedived on Tuesday and the Swiss franc held near a record high against the dollar and euro in Asia, having surged as a crisis of confidence gripped investors. .
London copper hit an eight-month low on Tuesday, while base metals futures on the Shanghai Futures Exchange also fell significantly, with benchmark Shanghai copper tumbling 6 percent to the downward trade limit [ID : nB9E7IC001]
IRON ORE LESS VOLATILE
China's spot iron ore market has remained less affected by growing fears over a global economic downturn than other commodities, with offers holding firm on Tuesday as supply from India, the world's biggest supplier of spot iron ore, has remained tight.
"There is panic in the iron ore market too, but prices are mainly supply-driven and thus almost steady, unlike copper or rebar," said an iron ore trader in Shenzhen.
Exports from a key producing region of India's Karnataka state have not yet resumed, compounded by a ban on mining in its Bellary region, which continues to buoy market fundamentals, particularly during its monsoon season.
Australia, the world's top iron ore supplier, expects demand to continue to grow, particularly from Asia, despite global market turmoil.
Quotes for Indian 63.5/63 iron ore stood unchanged at $185-187 per tonne, including freight, on Tuesday, while offers for 62-grade Newman fines from Australia were steady at $181-183 per tonne.
Key global iron ore indexes, tracking spot deals in China and used by global miners to settle contract prices, were mixed again on Monday.
The Steel Index's 62-percent iron ore reference price .IO62-CNI=SI rose 10 cents again to $178.1 per tonne, its highest since May 17, while Metal Bulletin Iron Ore Index .IO62-CNO=MB rose 32 cents to $177.77 per tonne, close to its highest in nearly two months hit last Thursday.
Platts 62-percent index IODBZ00-PLT fell half a dollar to $177.5 per tonne on Monday. ($1 = 6.436 yuan)
(sourced Thomson Reuters)
Tokyo stocks down 4.43% by noon
Tuesday, Aug 09, 2011 |By AFP
TOKYO - Tokyo shares plunged 4.43 per cent on Tuesday morning, a third straight day of heavy selling following massive losses on Wall Street.
The benchmark Nikkei-225 index of the Tokyo Stock Exchange lost 403.25 points to 8,694.31 by the lunch break, falling below the 9,000 mark for the first time since March 17, days after the quake-tsunami disaster.
The Topix index of all first-section issues tumbled 4.64 per cent or 36.34 points to 746.52.
Investors were increasingly nervous that the US economy may slide into another recession as the historic US credit downgrade by Standard & Poor's Friday sent shockwaves through markets already roiled by Europe's debt crisis.
Selling accelerated Tuesday following a plunge in South Korean shares and the release of Chinese data showing July inflation at a more-than three year high despite Beijing's efforts to rein in soaring food costs.
"We're starting to see a panic situation where investors are running for the exit to avoid further losses," Tsuyoshi Segawa, equity strategist at Mizuho Securities, told Dow Jones Newswires.
"The key (to stemming the global equity sell-off) is whether the US Fed will come out with measures, not only to increase liquidity, but to turn around economic conditions," said UBS Chief Strategist Shoji Hirakawa.
He cited the possibility the US Federal Reserve may decide on a third round of monetary easing as it holds a policy board meeting later Tuesday.
Shares in key markets such as the United States and Japan are "nearing their technical bottoms," he added.
Japan's Finance Minister Yoshihiko Noda said he was watching markets closely and staying in close contact with monetary authorities abroad.
He also denied a news report on Tuesday that he intends to resign soon and attempt to succeed unpopular Prime Minister Naoto Kan.
Tokyo Electric Power Company (TEPCO) fell 11.56 per cent to 344 yen after reports it would incur special losses of $6.5 billion for the April-June quarter as it faces huge compensation costs for the Fukushima nuclear disaster.
Oil companies plunged on sharp declines in crude prices, with Inpex down 9.79 per cent at 474,500 and JX Holdings off 7.52 per cent at 467 yen.
Financials also fell amid concerns over a global economic slowdown, with Nomura Holdings losing 7.05 per cent to 316 yen.
Stocks plunged around the world on Monday. On Wall Street the Dow Jones Industrial Average fell 5.55 per cent - its biggest one-day drop since late 2008 - while the broader S&P 500 fell 6.7 per cent and the tech-heavy Nasdaq dived 6.9 per cent.
In Europe Frankfurt was down more than 5.0 per cent, Paris lost 4.7 per cent and London dived nearly 3.4 per cent.
The euro bought $1.4174 in Asian midday trade on Tuesday, marginally down from $1.4179 in New York late Monday.
The dollar fell to 77.16 yen from 77.68 yen in New York.
Wednesday, July 27, 2011
Global iron ore price to double in following years - UBS
Wednesday, 27 Jul 2011
According to Mr He Peide analyst of UBS global raw materials, the commodity price in Q3 is bearish, but is likely to back on track in Q4, especially the price of iron ore.
Mr Peide said that "The iron ore price is going to double in the following years. Two reasons could be put down upon the bearish looking for price in Q3: First, US dollar will appreciate after the completion of QE2. Second, the economy issue of European debt hasn't been settled.”
But the US economy is likely to rebound from the weak situation in Q4, plus the soaring demand from China, the global commodity price will be buoyed. He is positively looking at the prospect of iron ore. Apart from the consumption of China, many other impetus have support the iron ore price, like the dominance from the three mining giants.
Moreover, India and Iran are considering levying higher export duty. Coupled with the increasing demand from India, the global iron ore price is likely to double in the following years.
(Sourced from Umetal)
According to Mr He Peide analyst of UBS global raw materials, the commodity price in Q3 is bearish, but is likely to back on track in Q4, especially the price of iron ore.
Mr Peide said that "The iron ore price is going to double in the following years. Two reasons could be put down upon the bearish looking for price in Q3: First, US dollar will appreciate after the completion of QE2. Second, the economy issue of European debt hasn't been settled.”
But the US economy is likely to rebound from the weak situation in Q4, plus the soaring demand from China, the global commodity price will be buoyed. He is positively looking at the prospect of iron ore. Apart from the consumption of China, many other impetus have support the iron ore price, like the dominance from the three mining giants.
Moreover, India and Iran are considering levying higher export duty. Coupled with the increasing demand from India, the global iron ore price is likely to double in the following years.
(Sourced from Umetal)
Monday, July 18, 2011
New, dangerous phase for Europe - Summers
Mon Jul 18, 2011(The views expressed here are Lawrence Summers' own)
By Lawrence Summers
CAMBRIDGE, Mass. (Reuters) - With last week's tumult in Italian markets, the European financial crisis has entered a new and far more dangerous phase. Where the crisis had been existential for small economies on the periphery of Europe but not systemically threatening to either the idea of European monetary union or to the functioning of the global financial system, it now threatens both European integration and the global recovery.
Last week's drama surrounding bond auctions in Europe's third leading economy should convince even the most hardened bureaucrat that the world can no longer let policy responses be shaped by dogma, bureaucratic agenda and expediency. It is to be hoped that European officials can engineer a decisive change in direction but if not, the world can no longer afford the deference that the IMF and non-European G20 officials have shown toward European policy makers over the last 15 months.
Three realities must be recognized if there is to be a chance of success.
First, the maintenance of systemic confidence is essential in a financial crisis. Teaching investors a lesson is a wish, not a policy. U.S. policymakers were applauded for about 12 hours for their willingness to let Lehman go bankrupt. The adverse consequences of the shattering effect that had on confidence are still being felt now. The European Central Bank (ECB) is right in its concern that punishing creditors for the sake of teaching lessons or building political support is reckless in a system that depends on confidence. Those who let Lehman go believed because time had passed since the Bear Stearns bailout that the market had learned lessons and so was prepared. In fact, the main lessons learned had to do with how to best find the exits, and so uncontrolled bankruptcies had systemic consequences that far exceeded their expectations.
Second, no country can be expected to generate huge primary surpluses for long periods for the benefit of foreign creditors. Meeting debt burdens at rates currently charged by the official sector for credit -- let alone the private sector -- would involve burdens on Greece, Ireland and Portugal comparable to the reparations burdens Keynes warned about in his book "The Economic Consequences of the Peace."
Third, whether or not a country is solvent depends not just on its debt burdens and its commitment to strong domestic policies but on the broader economic context. Liquidity problems left unattended become confidence problems. Debtors who are credibly highly solvent at interest rates close to or below their nominal growth rates become likely insolvent at higher interest rates, putting further pressure on rates and exacerbating solvency worries in a vicious cycle. This has already happened in Greece, Portugal and Ireland and is in danger of happening in Italy and Spain.
Debtor countries can only reduce their debts by running surpluses vis-a-vis the rest of the world. If traditional debtor countries are going to start running surpluses, traditional surplus countries must be willing to reduce their surpluses or move toward deficits.
In short, the approach of lending more and more from the official sector to countries that cannot access the market at premium rates of interest is unsustainable. The debts incurred will in large part never be repaid, even as their size discourages private capital flows and indeed any growth-creating initiative. Assertions that the most indebted countries can service their debts in full at current interest rates only undermine the credibility of policymakers when they go on to assert that the fundamentals are relatively sound in Spain and Italy. Further lending at premium interest rates only increases the scale of the necessary restructuring. It is reasonable to argue that the recognition of debt unsustainability in Greece has been excessively deferred. It is not reasonable to argue that Greek reprofiling or restructuring taken alone will address a growing general confidence crisis.
A fundamental shift of tack is required toward an approach that is focused on avoiding systemic risk, restarting growth, and restoring arithmetic credibility, rather than simply staving off imminent disaster. The twin realities that Greece, Italy and Ireland need debt relief and that the creditors have only limited capacity to take immediate losses means that all approaches require increased efforts from the European centre. Fortunately, the likely consequence of doing more up front is lower cost in the long run.
The precise details are less relevant than having an appropriate broad approach, and of course will need to be aligned with European political reality. But the crucial elements in any viable strategy will include:
European authorities must restate their commitment to solidarity as embodied in a common currency, and the recognition that the failure of any European economy marks the failure of the European economy and is unacceptable. Toward that end they then should make these further commitments.
First, for program countries. Interest rates on official sector debt will be reduced to a European borrowing rate defined as the rate at which common European entities backed with joint and several liabilities by all the countries of Europe can borrow. A default to the official sector will not be tolerated, so there is no reason to charge a risk premium, since charging a risk premium needlessly puts the success of the whole enterprise at risk.
Second, countries whose borrowing rate exceeds some threshold -- perhaps 200 basis points over the lowest national borrowing rate in the Euro system -- should be exempted from contribution requirements for bailout funds. The last thing the marginal need is to be pulled down by the weak.
Third, there must be a clear and unambiguous commitment that whatever else happens, the failure of major financial institutions in any country will not be permitted. The most serious financial breakdowns-in Indonesia in 1997, Russia in 1998, and the United States in 2008 -- come when authorities allow there to be doubt about the basic functioning of the financial system. This responsibility should rest with the ECB with the requisite political support and cover provided.
Fourth, countries judged to be pursuing sound policies will be permitted to buy EU guarantees on new debt issuances at a reasonable price payable on a deferred basis.
These measures would do much to contain the storm. They would lead to a reduction in payments for debtor nations, protect states at risk from participation in rescue efforts or from shortfalls in market confidence, and assure that the ECB is able to continue backstopping the stability of European banks.
This leaves the question of what is to be done with sovereign private debt. Creditors gain nothing from breakdown. They have signalled that they will support an approach based on a menu of options. Some will want to sell out of their exposures at prices marginally above their current market value. Others who still regard sovereign European debts as worth par should be provided with appropriate reduced interest rate, longer-maturity options. Debt repurchases are a possibility if the private sector accepts sufficiently large present value debt reductions. The key standard by which any approach should be judged is the genuine sustainability of program country debt repayments on realistic assumptions.
Much of this will seem unrealistic given the terms of Europe's debate. It seemed highly unrealistic even 10 days ago that Italy's solvency would come into substantial doubt. If the political will can be found, the technical economics are not that difficult. But it will require a shift from politically driven arithmetic to arithmetically driven politics. The alternative to forthright action today is much more expensive action -- to much less benefit -- in the not-too-distant future. The next few weeks may well be among the most consequential in the history of the European Union.
(Lawrence H. Summers is the Charles W. Eliot University Professor at Harvard University and a former U.S. Treasury secretary. He speaks and consults widely on economic and financial issues.)
(sourced Reuters)
Wednesday, March 9, 2011
Why Ireland should just not pay its debts
Mar7,2011 11:44
By Kathleen Brooks, Director of Research UK,Forex.com
Is default really such a dirty word?
By Kathleen Brooks, Director of Research UK,Forex.com
Is default really such a dirty word?
If banks lend people more money than they should, they face the risk of the borrower defaulting on their debts.
So why shouldn’t countries simply not pay?
Default might not be a bad thing, if you are an Irish taxpayer. As the EU authorities debate a long-term solution to Europe's sovereign debt crisis, it might want to consider the benefits of the "D" word and not just rule it out completely for fear it could turn investors off all eurozone assets.
Ireland wasn't fiscally profligate, its banks were. Lax regulatory regimes and a toxic chumminess amongst bank executives and property developers were at the root of Ireland's problems.
Along comes a housing bust, a state guarantee for all bank debt and the next thing you know the sovereign rating is getting cut and the country is cap-in-hand to the IMF and EU bailout fund.
Not their fault
The devastating result is that the Irish public has to pay increasing levels of tax for years to honour its former government's guarantee and take money out of their own pockets to pay the bondholders who chose to invest money in some of world's riskiest banks.
When you lay the argument out like this it seems thoroughly unfair.
Sharing the burden for the banks' mistakes between the Irish taxpayer and the people who lent the banks money in the first place makes sense for two reasons.
Firstly, it would reduce the debt in Ireland's economy and help foster growth over the coming years and, secondly, a default mechanism should help to prevent risk-free lending from distorting financial markets in future.
Not just Ireland that could benefit
This second point could also benefit Greece. Even though the Greek bailout was caused by government spending spiralling out of control, bond holders (who lent the money to them) turned a blind eye.
While the previous government failed to detail the true extent of the budget deficit, an investor could have done some simple research and found that Greece never adhered to the eurozone's fiscal rule that countries should spend no more than 3% more than their GDP in the 15 years leading up to its bailout.
So investors who bought Greek debt did so knowing that the country was flaunting EU fiscal rules. Yet Greece could still borrow money like it grew on trees.
While authorities in Athens need to urgently impose fiscal discipline and change a mind set of government hand-outs and tax evasion that is pervasive in Greek society, bond holders also need to be taught a lesson.
Irresponsible lenders should pay too
Essentially that lesson is that lending to a country is not risk free. As European Union authorities are debating the "grand bargain" and a long-term solution to the sovereign debt crisis this month, they would be wise to seriously consider haircuts (paying less back) and defaults as an option.
The markets might not be as against the idea as some may think. If you know that you could be subject to losses on your debt investment then you can price the risks accordingly.
While it is true that the cost of borrowing will be higher than it was during the boom, it may end up being lower than it is currently, especially for Greece, Ireland et al.
The more formal the process to allow a default the less scary it will be. And these changes could go some way to improving the health of the financial markets too, as they might make investors do more research and price risk according to hard facts, not based on implicit guarantees from the EU that no investor will be subject to a loss.
Investors are in limbo right now. They aren't willing to buy peripheral bonds, not because of the threat of default, but because of the uncertainty about how the sovereign crisis will reach a conclusion.
Reducing the debt burdens of these nations will go some way to doing this. Default might not be such a bad idea after all. More from Forex.com
So why shouldn’t countries simply not pay?
Default might not be a bad thing, if you are an Irish taxpayer. As the EU authorities debate a long-term solution to Europe's sovereign debt crisis, it might want to consider the benefits of the "D" word and not just rule it out completely for fear it could turn investors off all eurozone assets.
Ireland wasn't fiscally profligate, its banks were. Lax regulatory regimes and a toxic chumminess amongst bank executives and property developers were at the root of Ireland's problems.
Along comes a housing bust, a state guarantee for all bank debt and the next thing you know the sovereign rating is getting cut and the country is cap-in-hand to the IMF and EU bailout fund.
Not their fault
The devastating result is that the Irish public has to pay increasing levels of tax for years to honour its former government's guarantee and take money out of their own pockets to pay the bondholders who chose to invest money in some of world's riskiest banks.
When you lay the argument out like this it seems thoroughly unfair.
Sharing the burden for the banks' mistakes between the Irish taxpayer and the people who lent the banks money in the first place makes sense for two reasons.
Firstly, it would reduce the debt in Ireland's economy and help foster growth over the coming years and, secondly, a default mechanism should help to prevent risk-free lending from distorting financial markets in future.
Not just Ireland that could benefit
This second point could also benefit Greece. Even though the Greek bailout was caused by government spending spiralling out of control, bond holders (who lent the money to them) turned a blind eye.
While the previous government failed to detail the true extent of the budget deficit, an investor could have done some simple research and found that Greece never adhered to the eurozone's fiscal rule that countries should spend no more than 3% more than their GDP in the 15 years leading up to its bailout.
So investors who bought Greek debt did so knowing that the country was flaunting EU fiscal rules. Yet Greece could still borrow money like it grew on trees.
While authorities in Athens need to urgently impose fiscal discipline and change a mind set of government hand-outs and tax evasion that is pervasive in Greek society, bond holders also need to be taught a lesson.
Irresponsible lenders should pay too
Essentially that lesson is that lending to a country is not risk free. As European Union authorities are debating the "grand bargain" and a long-term solution to the sovereign debt crisis this month, they would be wise to seriously consider haircuts (paying less back) and defaults as an option.
The markets might not be as against the idea as some may think. If you know that you could be subject to losses on your debt investment then you can price the risks accordingly.
While it is true that the cost of borrowing will be higher than it was during the boom, it may end up being lower than it is currently, especially for Greece, Ireland et al.
The more formal the process to allow a default the less scary it will be. And these changes could go some way to improving the health of the financial markets too, as they might make investors do more research and price risk according to hard facts, not based on implicit guarantees from the EU that no investor will be subject to a loss.
Investors are in limbo right now. They aren't willing to buy peripheral bonds, not because of the threat of default, but because of the uncertainty about how the sovereign crisis will reach a conclusion.
Reducing the debt burdens of these nations will go some way to doing this. Default might not be such a bad idea after all. More from Forex.com
Friday, February 25, 2011
Economic Survey fears European debt crisis could hit Indian economy
Friday February 25, 2011New Delhi: The continuing debt turmoil in the euro zone area could have an adverse fallout on the Indian economy, hurting its capital flows as well as exports, the Economic Survey said today.
Further, it noted that rising international oil prices could aggravate the current account deficit, which is already at high levels.
Many countries like Greece and Portugal that are part of the euro zone -- a grouping of 16 nations that share a common currency euro -- are grappling with severe debt crisis that has even threatened to derail the fragile global economic recovery.
"The continuing sovereign debt risk in peripheral euro zone countries and fears that it could spread to the financial sector, together with the high fiscal and public debt in several advanced countries, pose a risk to global recovery.
"In the event of the crisis spreading, it could have fallout for the Indian economy through reversal of capital flows and slowdown in exports," said the Survey tabled in the Parliament today.
It says the fragile global recovery and robust domestic growth have led to higher current account deficit in 2009-10 and 2010-11 (April-September), "which is a matter of some concern".
"The problem may be further aggravated by the rising international oil prices," it noted.
Current account deficit happens when the total imports of goods, services and transfers is higher than total export of goods, services and transfers.
Official preliminary estimates show that current account deficit stood at USD 27.88 billion in April-September period of the current fiscal year.
During the same period last financial year, current account deficit was at USD 13.34 billion.
Global oil prices has been climbing in recent weeks due to the political unrest in the Middle East, especially in Libya, which has one of the largest crude reserves in Africa.
The Survey said that majority of the capital inflows are in the form of FIIs, which are volatile in nature. FIIs have pumped in about USD 24 billion in the April-September 2010 period.
"Periodic surge in capital flows could lead to problem of absorptive capacity in the economy, fuelling asset price bubbles, currency appreciation and stoking inflation. The challenge is in managing such surge in capital flows," it added.
On the other hand, FDI inflows stood at just USD 19 billion till November in the current fiscal.
-PTI
Further, it noted that rising international oil prices could aggravate the current account deficit, which is already at high levels.
Many countries like Greece and Portugal that are part of the euro zone -- a grouping of 16 nations that share a common currency euro -- are grappling with severe debt crisis that has even threatened to derail the fragile global economic recovery.
"The continuing sovereign debt risk in peripheral euro zone countries and fears that it could spread to the financial sector, together with the high fiscal and public debt in several advanced countries, pose a risk to global recovery.
"In the event of the crisis spreading, it could have fallout for the Indian economy through reversal of capital flows and slowdown in exports," said the Survey tabled in the Parliament today.
It says the fragile global recovery and robust domestic growth have led to higher current account deficit in 2009-10 and 2010-11 (April-September), "which is a matter of some concern".
"The problem may be further aggravated by the rising international oil prices," it noted.
Current account deficit happens when the total imports of goods, services and transfers is higher than total export of goods, services and transfers.
Official preliminary estimates show that current account deficit stood at USD 27.88 billion in April-September period of the current fiscal year.
During the same period last financial year, current account deficit was at USD 13.34 billion.
Global oil prices has been climbing in recent weeks due to the political unrest in the Middle East, especially in Libya, which has one of the largest crude reserves in Africa.
The Survey said that majority of the capital inflows are in the form of FIIs, which are volatile in nature. FIIs have pumped in about USD 24 billion in the April-September 2010 period.
"Periodic surge in capital flows could lead to problem of absorptive capacity in the economy, fuelling asset price bubbles, currency appreciation and stoking inflation. The challenge is in managing such surge in capital flows," it added.
On the other hand, FDI inflows stood at just USD 19 billion till November in the current fiscal.
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