Unlike the QE-lite-driven exuberance in Chinese stocks of the last few weeks (which faded dramatically overnight), China's industrial commodities (with near-record inventories) and seeing prices collapse. This may shock some who espy PMIs and government-created trade data and proclaim, China is fixed. In fact, as JPMorgan's China Sentiment Index (JSI) shows, things are anything but bright as it fell to the lowest since June last year (at 48.3 in August). Sales and margins are tumbling - despite supposedly lower input costs. Lastly, those focused on spot Yuan movements (strength in recent weeks) have suggested this also confirms China strength - inflows - but looking out 12-months shows the market is expecting a dramatic devaluation from current levels in the Chinese currency is coming.
JPMorgan's China Sentiment gauge tumbled below 50 - to its lowest since last June..
JSI declined sharply to 48.3 in August, the lowest level since June last year. July was the recent high at 54.4. Output/ sales, order book and gross margins weakened in August.
Dismal.. which appears to fit better with pricing of China's core industrial commodities... (via Business Recorder)
Chinese iron ore futures fell on Monday to their lowest since they were launched last year, while weaker buying interest pushed down prices for spot cargoes further on slower steel demand.
Benchmark spot iron ore is now trading close to this year's low of $89 a tonne and a further decline would take it to its weakest since September 2012, as top, low-cost miners lift output even more in a bid to take out smaller producers.
"When the price drops this fast, Chinese mills tend to wait and see and buying activity could slow down. Supply is still huge and we see various offers from miners, big mills and traders," said an iron ore trader in Shanghai.
As inventories rise once again - and remain near record highs...
Weaker steel prices have weighed on iron ore as a slowing Chinese economy and sluggish property sector darkened the outlook for demand. The most-active January rebar contract on the Shanghai Futures Exchange fell to 2,961 yuan a tonne on Monday, its lowest since the exchange launched rebar futures in March 2009.
And The Baltic Dry - despite Cramer's hopes - remains mired in over-supply and under-demand...
Perhaps the message is starting to sink in... SHCOMP's biggest drop in weeks...
And despite recent strength in Spot CNY... the market's forward-looking perspective of the Yuan sees notable devaluation coming...
Charts: Bloomberg and JPMorgan
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But apart from that... China is firing on all cylinders... right?