Are Chinese construction lay-offs a bad omen for Iron Ore prices?
Sani Group, China’s biggest maker of construction machines has announced a cut to its workforce.
Given lay-offs did not occur in the down cycles of 2005 and 2008, this is a clear sign some pain is being experienced in China’s industrial heartland.
Sany’s 60,000 staff produces concrete machinery, excavators, cranes, pile drivers and road machinery. Its revenue exceeds RMB80 billion or US$12.5 billion.
With the tripling in demand for machinery in China since 2001, it appears Sany has recently been selling machines on generous credit terms. As a result the machinery maker saw its net receivables double over 2011.
The slowdown in Chinese construction activity is not a good omen for the iron-ore price, currently US$135/tonne. China’s demand accounts for 63% of iron-ore’s global seaborne trade.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
ZORAN
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ILUKA
Is ILU still B1, or is skaffold still waiting for upgrades/downgrades from “others” to get an avg?
Cheers