The evidence of a China slowdown which is somewhat worse (perhaps much worse) than what the market was expecting continues to pile up.
We have got disastrous macro data for April, more and more companies acknowledging slowdown in the market, pathetic loan growth which brought my speculation that debt deflation is a reality, building up of raw material inventories, and perhaps the acknowledgment from the Premier that perhaps supporting growth is now a higher priority than it was previously.
The latest comes from a report from the Financial Times that Chinese commodities buyers are asking for deferral of delivery of raw materials, or occasionally decide simply to default on the contracts. Of course, this is not all too surprising if you have seen the level of build-up of iron ore inventory:
Chinese consumers of thermal coal and iron ore are asking traders to defer cargos and – in some cases – defaulting on their contracts, in the clearest sign yet of the impact of the country’s economic slowdown on the global raw materials markets.
The deferrals and defaults have only emerged in the last few days, traders said, and have contributed to a drop in iron ore and coal prices.
Meanwhile, Financial Times (again) is reporting yet another company expecting a slowdown in sales. Samsung is saying that the overall growth of the technology products is slowing:
Samsung has admitted to concerns over “worrying” weakness in Chinese consumer spending as customer sentiment, damped by government austerity measures, turns against spending on technology products.
Kim Young-ha, chief executive of Samsung Electronics China, said the overall market for technology goods in China will probably grow by only about 7 per cent this year, down from 10 per cent in 2011. He pointed to disappointing sales of televisions during the “Golden Week” holiday at the beginning of May – traditionally a strong sales period – as evidence of lacklustre demand.
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