Yes Virginia...It's a Bubble...

[GRG55]

Re: Have they looked under the Sofa Cushions?

TOP TEN REASONS WHY CITIC CAN'T FIND ITS ALUMINA:

It was claimed in a GM recall.

The Port moved and nobody told Citic.

The NSA knows but they're not talking.

JPM painted it yellow to increase the collateral value.

They can make it up on volume.

They made it up on volume.

Amazon says blame Direct Parcel.

Google Space says it's there if you use last year's update.

CNBC says "Everybody knows the Chinese aren't good at math".

Somebody stole the last reason.

[Polish_Silver]

Have they looked under the Sofa Cushions?

Talk about "supply destruction"

Citic Resources Can’t Locate All Its Metals Held at Qingdao Port

Citic Resources Holdings Ltd. (1205), the commodities trader controlled by China’s largest state-owned company, said a court has been unable to locate more than half of its alumina stored at China’s Qingdao Port.

Citic sought a court order to find its copper and alumina held at the port and the court was unable to locate about 123,446 metric tons of its alumina, The company will also consider “legal proceedings if necessary”...

This should be under "you can't make this stuff up".

One hundred thousand tons. How big a pile is that?

[ST]

Re: Yes Virginia...It's a Bubble...

The 'brilliant' ploy for some of these Chinese players was to use different receipts as collateral for the same physical commodities for too-eager-to-lend counter parties. Nice way to produce leverage.

[GRG55]

Re: Yes Virginia...It's a Bubble...

Talk about "supply destruction"

Enron times 1000?

Citic Resources Can’t Locate All Its Metals Held at Qingdao Port

Jun 17, 2014 6:55 PM MT

Citic Resources Holdings Ltd. (1205), the commodities trader controlled by China’s largest state-owned company, said a court has been unable to locate more than half of its alumina stored at China’s Qingdao Port.

Citic sought a court order to find its copper and alumina held at the port and the court was unable to locate about 123,446 metric tons of its alumina, Citic Resources said in statement to the Hong Kong stock exchange. The company holds title documents to 223,270 metric tons of alumina and 7,486 metric tons of copper it has stored at the port, it said.

Qingdao Port is counting industrial metals held in some of its bonded warehouses to determine if they match the amount in documents pledged to banks as collateral for loans, three people with knowledge of the probe said on June 5. The port is concerned that there has been multiple counting of some batches of metals including copper and aluminum, said the people.

“The group will conduct its own investigation to ascertain why the court has been unable to enforce its sequestration order in respect of all of the group’s alumina,” Citic Resources said in the statement. The company will also consider “legal proceedings if necessary”...

[GRG55]

Re: Yes Virginia...It's a Bubble...

Chinese manufacturing continues to contract

HSBC China manufacturing PMI for April is out at 9:45 p.m. ET.Economists polled by Bloomberg were looking for a reading of 48.3. And the number is down from the flash reading of 48.3, but up from 48.0 in March.
A reading below 50 indicates contraction.
Production at Chinese manufacturers fell for the third straight month, but as a slower pace. Meanwhile, staffing levels were cut for the sixth straight month and at a faster pace, “amid reports of company down-sizing policies which stemmed from lower production requirements.”
“The latest data implied that domestic demand contracted at a slower pace, but remained sluggish,” said Hongbin Qu, HSBC chief economist for China. “Meanwhile, both the new export orders and employment sub-indices contracted, and were revised down from the earlier flash readings. These indicate that the manufacturing sector, and the broader economy as a whole, continues to lose momentum.”
Beijing announced a mini-stimulus to help stabilize growth and this is expected to have improved business sentiment.
China’s official manufacturing PMI number climbed to 50.4. The HSBC survey has a smaller sample than the official number and is more tilted towards small and medium enterprises.
Here's a look at the trajectory of Chinese PMI:

[Southernguy]

Re: Yes Virginia...It's a Bubble...

Thanks for your, as always excellent, comments, PoZ.

[ProdigyofZen]

Re: Yes Virginia...It's a Bubble...

Maybe active traders (PoZ are you there?) can bring some light in the room.

Traders estimate more than 10 million tonnes of soybeans, out of China's imports of 63.4 million tonnes last year, are imported for financing annually.

Sunrise, which has 5,700 employees and 27 billion yuan ($4.34 billion) in assets according to its website, launched a financial services firm in 2009, which offers small scale loans...

It could be that the Chinese have shifted financing from using iron ore (which has begun to fall in price last two months) to using soybeans for loans/financing which makes it possible it keeps the soybean prices high (for a short time) despite walking away from shipments.

Iron Ore Price Fears

Look what happened to iron ore and copper last year where they both fell considerably before rebounding a bit into this year but now both have continued to fall.

Soybean is obviously different because it is used for food and not the overproduction of buildings in China but if they are using soybean for financing like they did iron ore or copper it strikes me that maybe the price would begin to fall as the Chinese importers default........

Southernguy I know Uruguay depends on soybean exports so it is definitely something to continue to watch.

[Southernguy]

Re: Yes Virginia...It's a Bubble...

I simply do not understand: check that information against this one:

BUENOS AIRES.- El precio de la soja cerró ayer en U$S 558,06 por tonelada y alcanzó un máximo de nueve meses en la Bolsa de Chicago, luego de conocerse una nueva reducción de los stocks disponibles de la oleaginosa en el mercado norteamericano.

Los contratos más activos avanzaron hoy por tercer consecutivo al sumar 1,1% a su cotización, lo que representó una mejora de U$S 6,40 con respecto a ayer. Las posiciones menos activas, no obstante, tuvieron subas más moderadas.

Translation: Soybeans price closed yesterday at 558 dollars/ton which was the top in 9 months in Chicago Exchange after a new low in available stocks in american market was reached (sorry for shoddy translation)
Most active contracts surged today for third consecutive day by 1,1%, that is 6.4 dollars from yesterday. Less active positions had, however more moderate rises.
the information is dated apr 17. Yesterday it had slowed a bit, it was 550 dollars. Certainly futures down to 2017 are far lower (in the 400 dollars range)
Don't know how to match these news.
Maybe active traders (PoZ are you there?) can bring some light in the room.
These kind of matters are very important in our heavy sobeans exports dependant places.

Mercados de Chicago y Kansas
Precios de Cierre en U$S / TN								lunes, 21 de abril de 2014
	Trigo				Maíz		Soja		Aceite Soja		Harina Soja
	Chicago/1		Kansas/2		Chicago/3		Chicago/4		Chicago/5		Chicago/6
may-14	245,54	-8,5	269,70	-8,8	192,32	-2,5	550,71	-5,6	947,97	-9,0	535,38	-2,9
jul-14	248,21	-8,6	272,55	-8,5	194,38	-2,7	546,48	-5,5	953,70	-8,8	524,80	-2,1
ago-14							517,73	-4,2	950,84	-8,2	490,30	-2,9
sep-14	251,70	-8,5	275,31	-8,2	193,50	-2,7	472,53	-4,5	944,89	-6,8	456,46	-5,0
oct-14									933,64	-5,5	422,18	-6,1
nov-14							449,66	-5,7
dic-14	256,57	-8,4	279,17	-7,8	192,91	-2,7			934,74	-5,7	419,53	-6,2
ene-15							451,41	-5,8	936,29	-6,2	418,65	-5,8
mar-15	261,34	-8,2	280,27	-7,8	196,06	-2,6	452,88	-5,7	938,71	-6,2	419,31	-5,8
may-15	262,17	-9,1	277,51	-7,4	198,61	-2,3	454,07	-5,7	940,48	-7,3	419,09	-6,1
jul-15	256,66	-7,7	271,73	-5,3	200,48	-2,0	455,72	-5,7	943,12	-8,2	420,19	-6,2
ago-15							447,27	-5,7	941,36	-8,2	417,77	-5,7
sep-15	257,95	-7,6	272,09	-5,1	194,78	-1,8	437,26	-5,4	937,83	-8,2	412,26	-5,0
oct-15									930,78	-9,7	403,88	-5,6
nov-15							435,42	-5,4
dic-15	260,89	-7,7	274,57	-5,4	191,63	-2,0			931,44	-10,6	402,56	-5,4
ene-16							435,88	-5,4
mar-16	261,99	-7,6	273,93	-5,6	194,78	-1,8
may-16	261,44	-7,5	273,93	-5,6	196,45	-1,7
jul-16	248,21	-7,0	251,88	-5,1	197,04	-1,9
sep-16					191,43	-2,0
nov-16							409,15	-4,3
dic-16					187,10	-2,1
jul-17					192,61	-2,1
nov-17							399,23	-4,3
dic-17					182,47	-2,1

QUOTE=GRG55;280221]Massive soybean defaults loom as China buyers play hard-ball: top buyer

RIZHAO, China Thu Apr 17, 2014 8:20am EDT

(Reuters) - Chinese buyers may default on a further 1.2 million metric tons (1.32 million tons) of soybeans worth about $900 million being shipped from the United States and South America, to avoid incurring huge losses in a depressed local market, the country's top soy buyer said.

The hard-line approach taken by Chinese buyers raises the possibility that more cargoes could be dumped into the market, after buyers walked away from at least 500,000 tonnes of shipments in recent weeks.

Trading firms mostly clustered in China's Shandong province have refused to make payments for about 20 shipments, Shao Guorui, general manager of Shandong Sunrise Group, said in an interview...

...Trading firms in China are battling with weak demand for soymeal. Crushers, confronted by negative margins, are also unwilling to accept cargoes at current prices.

"If they take these cargoes, some could go bankrupt. That's why they choose not to honor the contracts," Shao said.
In a sign of the pressure the sector is under, China's Dongling Grain & Oil said it expected to post a loss of 202.8 million yuan ($32.60 million)in the first quarter, versus a net profit of 8.2 million yuan previous year...

...China's soybean imports in the first quarter jumped 33.5 percent, a record for the quarter and industry sources see a rush of cargoes in the second quarter. The rise comes amid an increasing use of soybeans in financing trades to secure credit.

Traders estimate more than 10 million tonnes of soybeans, out of China's imports of 63.4 million tonnes last year, are imported for financing annually.

Sunrise, which has 5,700 employees and 27 billion yuan ($4.34 billion) in assets according to its website, launched a financial services firm in 2009, which offers small scale loans...
[/QUOTE]

[GRG55]

Re: Yes Virginia...It's a Bubble...

Zombies Spreading Shows Chaori Default Just Start: China Credit

By Bloomberg NewsMar 6, 2014 11:07 PM MT

The number of Chinese companies with debt double equity has surged since the global financial crisis, suggesting the first onshore bond default won’t be the last...

Massive soybean defaults loom as China buyers play hard-ball: top buyer

RIZHAO, China Thu Apr 17, 2014 8:20am EDT

(Reuters) - Chinese buyers may default on a further 1.2 million metric tons (1.32 million tons) of soybeans worth about $900 million being shipped from the United States and South America, to avoid incurring huge losses in a depressed local market, the country's top soy buyer said.

The hard-line approach taken by Chinese buyers raises the possibility that more cargoes could be dumped into the market, after buyers walked away from at least 500,000 tonnes of shipments in recent weeks.

Trading firms mostly clustered in China's Shandong province have refused to make payments for about 20 shipments, Shao Guorui, general manager of Shandong Sunrise Group, said in an interview...

...Trading firms in China are battling with weak demand for soymeal. Crushers, confronted by negative margins, are also unwilling to accept cargoes at current prices.

"If they take these cargoes, some could go bankrupt. That's why they choose not to honor the contracts," Shao said.
In a sign of the pressure the sector is under, China's Dongling Grain & Oil said it expected to post a loss of 202.8 million yuan ($32.60 million)in the first quarter, versus a net profit of 8.2 million yuan previous year...

...China's soybean imports in the first quarter jumped 33.5 percent, a record for the quarter and industry sources see a rush of cargoes in the second quarter. The rise comes amid an increasing use of soybeans in financing trades to secure credit.

Traders estimate more than 10 million tonnes of soybeans, out of China's imports of 63.4 million tonnes last year, are imported for financing annually.

Sunrise, which has 5,700 employees and 27 billion yuan ($4.34 billion) in assets according to its website, launched a financial services firm in 2009, which offers small scale loans...

[Slimprofits]

Re: Yes Virginia...It's a Bubble...

PBOC Vice Gov. Yi Gang: China Will Implement Deposit Insurance “Probably” This Year

Apr 10, 2014

“China will implement a deposit-insurance scheme, probably this year,” said Yi Gang, vice governor of the People’s Bank of China, speaking on a panel hosted by the Johns Hopkins School of Advanced International Studies. “That is also very important infrastructure for continued liberalization in interest rates.”

China’s central bank currently maintains a cap on the interest rate banks can pay depositors. In March, PBOC Gov. Zhou Xiaochuan said that “deposit-rate liberalization is on our agenda,” and “I personally think it’s very likely to be realized in a year or two.”

[aaron]

Re: Yes Virginia...It's a Bubble...

Occupy Wang Street!

[Slimprofits]

Re: Yes Virginia...It's a Bubble...

Chinese Police Confront Trust Investors Demanding Repayment http://www.bloomberg.com/news/2014-0...by-police.html

Chinese investors demanding their money back from a troubled 973 million-yuan ($156 million) high-yield product in Shanxi province were confronted by police in front of a China Construction Bank Corp. (939) branch.

People wearing white masks with the words “despicable bank” and “pay back our money” were among at least 30 investors facing special-forces officers in dark uniforms in Taiyuan city, about 521 kilometers (324 miles) southwest of Beijing. The nation’s second-largest bank is the custodian of the Songhuajiang River No. 77 trust, which missed six payments as of last month, according to the Economic Observer.

“We have been cheated by CCB,” said Wang Fengying, 60, a Shanxi resident who said her husband had invested 1 million yuan in the product. “Our parents are very old. We need the money for their medical bills and to buy a home for my child. We are so miserable and they won’t even let us demand our money back.”

[GRG55]

China Blinks?

Seems the forecasts for the death of commodities and the materials stocks might be a wee bit premature...after all, why would the mother of all bubbles be terminated any earlier than absolutely necessary?

China

A $6.8 Trillion Price Tag for China's Urbanization

March 25, 2014

China has finally put a price tag on its massive plan for urbanization, and it’s a big one. The cost of bringing an additional couple of hundred million people to cities over the next seven years? Some 42 trillion yuan ($6.8 trillion), announced an official from China’s Ministry of Finance last week.

“The flaws in the previous model, in which urban construction mostly relied on land sales and fiscal revenue, have emerged in recent years, and the model is unsustainable,” warned Wang Bao’an, vice minister of finance, on March 17. His comments came one day after China’s State Council and the Central Committee of the Communist Party released the “National New-type Urbanization Plan (2014-2020),” which aims to lift the proportion of Chinese living in cities to 60 percent by 2020, from 53.7 percent now...

...“Urbanization is a powerful engine for China’s sustained and healthy economic growth, said Lou Jiwei, Chinese Minister of Finance in a news release on March 25. “We need to accelerate reform of the fiscal and tax system as well as investment and financing mechanisms,” he said, citing the need for private investment into public infrastructure projects using the public-private partnership model.

To date, China’s localities have turned to debt—often backed by land sales–to finance operations. The median debt-to-gross domestic product ratio of all of China’s 30-some provinces is 31 percent, with a high of 79 percent in the poor southwestern province of Guizhou, notes a March 25 report by Moody’s Investors Services. “Many provinces are reliant on land sales for a large portion of their revenues. While this revenue source has proven to be quite lucrative, it has also been highly volatile and therefore not a reliable source for debt repayment,” the report cautions...

[Slimprofits]

Re: Yes Virginia...It's a Bubble...

http://www.bloomberg.com/news/2014-0...ault-risk.html

Baoding Tianwei Baobian Electric Co. (600550) said its notes will be halted from trading tomorrow amid signals the Chinese government will allow more defaults in the nation’s onshore bond market as the economy slows.

The solar-cell maker said the Shanghai Stock Exchange decided to halt trading of its 1.6 billion yuan ($258 million) of bonds, according to an exchange statement today. The company reported a net loss of 5.23 billion yuan in 2013 versus a 1.55 billion yuan earnings deficit a year ago and its capacity to repay its debt is in “absolute trouble,” Guotai Junan Securities Co. said in a March 13 report.

[ProdigyofZen]

Re: Yes Virginia...It's a Bubble...

Commodity firms have a way of unwinding quickly and violently because the majority of their cash flow is tied up between a few commodities and their prices unlike a bank who has its hands in every aspect of the economy to derive cash flow.

But I do agree they have been around a long time with the best connections in the business and earn a lot per annum.