The big Beijing 2008 Olympics China shutdown - commodities fall only temporary?

Beijing's Olympic shutdown begins Sunday [20 Jul 2008], a drastic plan to lift the Chinese capital's gray shroud of pollution just three weeks ahead of the games. Half of Beijing's 3.3 million vehicles will be pulled off the roads and many polluting factories will be shuttered. In a highly stage-managed Olympics, no challenge is greater than producing crystalline air for 10,500 of the world's greatest athletes.

- Earlier on, I was wondering aloud whether the shutdown of the massive Chinese industrial juggernaut might have something to do with the recent commodity meltdown, especially in crude oil, that had much of the world breathing a sigh of relief after helplessly watching prices nearly triple to $147.27 from $51 back in Jan 2007. Evidently, other people were also thinking the same thing :

seekingalpha.com :

Oil got denied when it almost tapped $150 and dived to $123, taking down the rest of the commodities world - metals, agriculture, coal, you name it. Sure, maybe it's the speculators the regulators have now caught, or maybe it's money coming out to chase the banks off their lows. But: What if it's because China has halted a big chunk of its manufacturing to clear the air for the Olympics ... just thinking what will happen starting September, when the Olympics are over, and the China manufacturing beast roars to life again? Devouring commodities for breakfast, lunch, dinner, and a midnight snack 7 days a week ...

- If, like they say, in a tight supply situation, all pricing occurs at the margins, the marginal decrease and, later, subsequent increase in demand in Chinese demand could just be the factor that tips the balance in either direction. If true, the commodities selldown could only be temporary, notwithstanding the American economic slowdown. Remember that the US economy has been slowing down for months, but the way commodities fell, it was like some giant switch was thrown. This massive China shutdown could have been that giant switch. Come Sep 2008, when the Beijing Olympics 2008 winds down, we'll get to see if this hypothesis is right.

(2008-07-28 23:39:08 SGT) [Energy] Permalink

Singapore petrol prices drop by 10 cents, largest in rapid succession of cuts

This article belongs to the Singapore inflation watch story arc.

channelnewsasia.com :

In the largest cut to date, pump prices of petrol and diesel have been adjusted down by 10 cents. As of 10am Monday [28 Jul 2008], stations run by SPC, Shell and Caltex had their pump prices down to S$2.110 for RON98 and S$2.036 and S$2.003 for RON95 and RON92 petrol respectively. With on-site discounts, this brings the mid-range 95 unleaded petrol below the two dollar mark for the first time in months. Diesel is now priced at S$1.863 per litre. Crude oil futures are holding steady and hovering at a seven-week low of about US$123 a barrel, despite talk over the weekend that the price of oil could drop to between US$70 and US$80.

- Enjoy the lower prices whilst stocks last. NYMEX crude oil prices seem to be firming up just a bit above $120 support. We haven't seen a drop yet to $110 or $100 and people are already talking about $70 and $80. It is a rather interesting sign, from a contrarian point of view.

Singapore NODX non-oil domestic exports fall 10.5% in June 2008

This article belongs to the Singapore stagflation watch story arc.

channelnewsasia.com :

Singapore's key non-oil domestic exports (NODX) fell an annual 10.5% in June, pulled down by weaker shipments to the US market as well as to China and Europe, IE Singapore said Thursday [17 Jul 2008] in its monthly report. The drop was steeper than the 1.8% fall forecast in a Dow Jones poll of economists, and unchanged from the 10.5% decline seen in May. Electronics exports, which have been dropping since February last year, contracted 14.6%, while non-electronic shipments eased 7.9%. NODX to the US recorded the largest decline of 24.3% to S$1.5 billion. The monthly figures are a closely watched barometer of Singapore's export-led economy in which GDP was valued at S$243.17 billion last year.

Stagflation is stagnant or slowing economic growth, with high or rising inflation at the same time. We've got the slowing economic growth, and we've got the rising inflation. With NODX figures being a leading indicator, and Singapore's GDP growing only 1.9% in Q2 2008, and inflation still running at 26-year highs, official stagflation may not be too far away. The question now is, what can be done about it?

(2008-07-28 22:32:14 SGT) [Biz] Permalink

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