When export markets in China keep dropping and the Chinese...

When export markets in China keep dropping and the Chinese government keeps stock piling I guess sooner or later they are going to tell steel makers to slow down, and going to stop buying resources for stock piles. It's partly this stock piling that has driven up demand/price. Now that show is over.

http://au.biz.yahoo.com/090813/2/27z2w.html

But this was always going to happen, China is a sick market, now held up by speculation, last night on Nightline/Lateline what ever its called BHP was asked where is demand going to be coming from for the future, the answer was no answer, just some muttering rubbish.

As for the Chinese economy itself, well yesterdays big drop and today's panic announcement to calm market fares gives a good indication on the speculation now built into that economy. The rumors of money tightening drove the market down yesterday by %4.7 and over the last 3 or 4 days dropping by a few % more.

So, now we have a market that has over capacity, bulled up to the max on mostly speculation in property, stocks and commodities, while on the other side its main driver exports keeps dropping, and at the slightest rumor comes crashing down. They will have no choice but to tighten money supply to bet off inflation later on to stop the 800 million poor people in the countryside creating social unrest. And when that supply of cash slows watch this market crash as people pull out.

I would love to see where RIO/BHP and a few others are now going to get their demand from. I would say the rest of 2009 to late 2010 is going to get rough.

Today Wen Jia Biao tried to calm markets, he put a stop to the rumors and the market so far is back to about 1% from just about -1%, if words can shake this market so much now then its fundamentals look pretty weak (a house of cards comes to mind)