Presenting, just another Wednesday working afternoon at a Chinese 5,800 cubic metre blast furnace factory:
Note the empty car park.
That picture comes to us courtesy of Nicholas Zhu of ANZ Bank via Simon Hunt, a veteran base-metal market analyst and uber copper bear.
As Hunt explains, it’s anecdotal evidence that things in China might not be as rosy as they seem on the surface. Zhu visited the factory earlier this month, and noted that work-shifts had been shortened to five-day weeks instead of the normal seven-day weeks. Furthermore, only one blast furnace was operating.
…wire rods for use in the construction industry were piled up everywhere: inside a full warehouse at the riverbank, out in the open near wharfs and any empty space next to the factory floor.
Yes, it’s only anecdotal evidence. And yes, maybe the car park never got full. But presuming it did, it’s an interesting picture to keep in mind.
After all, as Hunt also notes:
Steel production rose by just 1.2% in 2011, but fell sharply in the last six months. Domestic iron ore prices have collapsed falling by 22% in the last four months according to the China Iron and Steel Association.
And to support that anecdotal evidence further here’s a chart courtesy of Sean Corrigan at Diapason Commodities Management, using data from the World Steel Association:
Goldman on metal pawning – FT Alphaville
Don’t worry, it’s normal for China’s GDP to appear a little weird – FT Alphaville