Chinese Steelmakers Lowering Prices
August 30, 2008
Global steel prices are rapidly soaring. In the face of dropping demand, some Chinese steelmakers lowered prices. But compared to already skyrocketed prices, 200rmb discount is nothing. Here is the news about it:
Driven by this, a list of Chinese steelmakers, including Angang Steel Co., Ltd., Shougang Group, Maanshan Iron & Steel Co., Ltd. (SHSE: 600808) and Baosteel Group Xinjiang Bayi Iron and Steel Co., Ltd., lowered the prices of their products in succession. The average markdown stood at about CNY 200 per ton, according to industry experts.
Statistics from the Ministry of Commerce (MoC) show that China’s steel price averaged at CNY 6,284 per ton in July 2008, down 0.4 percent from June this year. The figure was CNY 6,124 per ton in the first half of August, down 2.2 percent from 15 days ago.
Source: Shanghai Daily
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VIETNAM’S Inflation is Quickening
August 27, 2008
VIETNAM’S inflation quickened this month after the government increased fuel prices by a record amount to pass on rising oil costs.
The consumer-price index rose 1.6 percent from July, when it gained 1.1 percent, the General Statistics Office said yesterday in Hanoi. Annual inflation accelerated to 28.3 percent, the fastest pace since at least 1992, from 27 percent last month.
The government last month lifted the cost of the most commonly used grade of gasoline by almost a third, adding to investor concern that accelerating inflation in Vietnam, which already has Asia’s highest rate, would destabilize growth.
“We all expected inflation to quicken after the government raised fuel prices, but it’s not as bad as we thought,” Nguyen Manh, Hanoi-based director of treasury at Bank for Investment & Development of Vietnam, told Bloomberg News. BIDV, the second-biggest lender by assets, had expected consumer prices to gain at least 2 percent, Manh said.
Prices in the category, including transport led the index higher, rising 9.1 percent after gains of 0.6 percent in July. From a year earlier, transport costs were up 25.6 percent, compared with 15.3 percent last month.
Vietnam needed to lower costs for the government by cutting fuel subsidies to state-owned retailers, Finance Minister Vu Van Ninh said after the July increase. The increase was in response to a 20-percent surge in crude oil costs this year. Crude oil has dropped more than 21 percent after touching a record US$147.27 a barrel on July 11. Vietnam’s finance ministry on August 14 lowered fuel costs by 5.3 percent to “reduce the cost of goods and ensure consumers’ benefit.”
The consumer-price index rose less than expected by the country’s three brokerages, indicating the government’s measures to rein in inflation were taking effect. Vietcombank Securities, Saigon Securities Inc and Bao Viet Securities had all expected an average monthly increase of more than 2 percent.
The central bank has raised the benchmark interest rate three times this year to 14 percent, the highest in Asia, and has boosted reserve requirements for banks.
The country also wants to keep credit growth below 30 percent and is reducing government spending by 10 percent this year.
Source: Shanghai Daily
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Timeline of China’s fiscal and monetary policy since 1995
August 25, 2008
As China’s Currency regulations gain more importance and directly affect quotations, Here are some facts about China’s fiscal and monetary policies from the present back to 1995.
– Tight monetary policy (current)
Earlier this year, facing pressure from surging inflation, a resurgence in fixed-asset investment and excessive lending and liquidity, China decided to shift its monetary policy from “prudent” to “tight”.
Tight policy has included raising commercial banks’ reserve-requirement ratios, allowing the currency — renminbi (also called the yuan) — to appreciate and controlling bank lending.
The latest move was in June, when the central bank — People’s Bank of China (PBOC) — raised the reserve ratio by 1 percentage point in all: 0.5 point effective June 15 and another 0.5 point effective June 25. The rise on June 25 was the sixth this year and brought the ratio to a record 17.5 percent.
The tight policy appears to have had an impact. The consumer price index eased to 6.3 percent in July from a near 12-year high of 8.7 percent in February.
Economic growth slowed to 10.4 percent in the first half of 2008 from 11.9 percent for all of 2007.
– “Prudent” fiscal and monetary policies (2005-2007)
China switched to a “prudent” policy at the beginning of 2005. During 2005, the country reduced issues of long-term National Construction Bonds to 80 billion yuan (11.7 billion U.S. dollars) from 110 billion yuan the previous year and cut the fiscal deficitby 19.8 billion yuan to 300 billion yuan.
In 2007, the PBOC raised the reserve ratio 10 times, from 9 percent in January to 14.5 percent as of December. The central bank had raised the ratio only five times over six years since 2000.
– “Proactive” fiscal policy and “prudent” monetary policy (1998-2004)
The proactive fiscal policy and prudent monetary policy were adopted in 1998 to counteract the negative impact of the 1997 Asian financial crisis.
China issued 910 billion yuan worth of national bonds over these years and invested the proceeds in infrastructure. The move boosted domestic demand, which had been weakened by the financial crisis, and contributed 1.5 to 2 percentage points of national output growth each year.
– “Appropriately tight” fiscal and monetary policies (1995-1997)
To rein in high inflation that started in 1993, China imposed appropriately tight fiscal and monetary policies. There was a surge in fixed-asset investment in the latter half of 1992, which was followed by major food price rises in 1993.
After the new policies were launched, the PBOC stepped up efforts to control money supply and finally reduced the consumer price index from 21.2 percent in January to 12.3 percent in August in 1995. The annual price increase was kept under 15 percent and gradually leveled out in the following years.
Source: Source: China Daily
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China allocates $512m to support small enterprises
August 22, 2008
China’s Ministry of Finance (MOF) on Tuesday announced the country would earmark 3.51 billion yuan ($512 million) this year to support the development of domestic small- and medium-sized enterprises (SMEs).
Financing difficulty had long been a bottleneck for domestic SMEs since China started providing small mortgage loans in 2002.
The government placed helping small companies and increasing employment as one of its top priorities this year. It promised to help 10 million urban dwellers find employment this year.
The MOF said on its website the country had invested nearly 17 billion yuan through 2007 to set up six special funds to support SMEs.
These included a technology innovation fund, an overseas marketing fund, an agricultural science and technology application fund, a small- and medium-scale enterprise subsidy fund, a small- and medium-sized companies development fund and a small- and medium-scale firm platform fund.
In a similar development, the People’s Bank of China, the central bank, announced on Monday the country’s financial institutions would raise the ceiling of small-scale mortgage loans from 1 million yuan to 2 million yuan to help them better fund their businesses.
Source: China Daily
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PVC Prices Climbing as a Result of Olympic Effect
August 21, 2008
Prices will probably reach a record US$1,400 a metric ton this year because of production curbs in China’s mainland, source of almost 25 percent of the world’s polyvinyl chloride, Danny Ho, an analyst at Yuanta Securities Co, the largest brokerage in Taiwan, told Bloomberg News.
China has closed some PVC plants because most of its factories make the material from coal, a process that pollutes the air and consumes electricity. Reduced supplies may increase home construction costs because PVC is required at every building site as it is used to insulate electrical wires and for piping. Toys and raincoats may also cost more, according to industry officials. “PVC supply is falling,” Ho said.
Many factories will stay shut after the August 8-24 Olympic Games to meet tighter pollution regulations and because of shortages of coal and power, he said.
As much as 30 percent of China’s PVC capacity may currently be idled by the Olympics, stricter environmental controls and higher raw-material costs, said Zhang Guomin, vice chairman of the China Chlor-Alkali Industry Association, which represents about 100 PVC producers.
“The situation won’t change much after the Olympics,” Zhang said in an interview in Tianjin. Some plants will remain shut because of pollution curbs and inadequate electricity supply, he said.
“PVC prices should be on an uptrend” because of plant closures and rising costs, Zhang said.
Asian PVC prices may rise next month because of demand from manufacturers of items such as toys and plastic Christmas trees before year-end orders, said Cindy Mo, a Shanghai-based director at consultants Chemical Markets Associates Inc.
Source:Bloomberg
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