My opinions on China are based on information in the media and analysis of the property market and the steel/io trade.
Below are some articles about China's property market, and it is just starting to affect China's growth and the steel market and hence the Zinc market.
As far as the big Australian producers still pumping out big production figures in IO. They are doing that to drive the competition out of business and its working.
China's property market is what was driving the base metals market and that market is now correcting. With cities lying vacant in China there is a huge oversupply of property.
China's real property problem
Date
February 27, 2015
William Pesek
With vast ghost cities emerging, new construction is evaporating no matter what sales and prices do - and the traditional correlation between housing and steel demand is breaking down.
Photo: Kevin Frayer
As China slows down, leaders in Beijing are understandably turning to one of their favoured growth stabilisers: housing.
Property starts (measured in area of floor space) declined 26 per cent year-over-year in December following a 35 per cent plunge in November. That marks a dramatic deepening of the 5.5 per cent plunge seen between January and October 2014. Also last year, parcels of land allotted for new projects slid 25 per cent, a blow for highly-indebted local governments that rely on such sales.
It gets worse. Even with contingency plans to stabilise the market, "we believe China's underlying housing demand is peaking and will soon start declining," Yao says. That's a problem given the current oversupply - all those ghost cities - which Yao estimates will require "at least another two years" to work through.
In the meantime, "the traditional correlation between housing sales and indicators like steel use and construction starts will break down."
In Yao's rosiest scenario, new stimulus measures would only pump up sales 2 per cent and limit the fall in housing starts to 10 per cent.
One has to wonder at what cost, too. In the short run, it's easy to understand why the government is targeting housing prices.
As the experiences of Japan, the U.S. and now parts of Europe demonstrate, housing busts take entire economies down with them. But such measures ultimately make China more vulnerable to a crash.
A $US328 billion ($421 billion) surge in new credit in January - the third straight monthly jump - adds to a debt pile that has grown to frightening proportions.
All this also contributes to unhealthy expectations among investors, who appear convinced Beijing will always step in to boost growth with new borrowing. More than stimulus, says Leland Miller, the New York-based president of China Beige Book, China needs to get serious about its stated plans to shift away from excessive investment and exports toward a more services-based economy.
Read the full article here
http://www.smh.com.au/business/comm...as-real-property-problem-20150227-13qukz.html
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RBA warns on Chinese property market
Reserve Bank of Australia researchers have warned that Chinese policymakers may not be willing to stimulate the nation's slowing property market as much as needed, in a glaring warning for Australian commodity exporters.
In the central bank's quarterly Bulletin, the RBA noted that the latest slowdown in the Chinese property market has coincided with a pronounced increase in property developer leverage.
This means the market remains a key risk to Chinese economic growth, financial stability and to the imports of resource commodities. The latter will sound warnings bells for Australia, which counts China as its largest trading partner.
The outlook for the Chinese property market, particularly for new property construction, is of relevance to Australia given the sector's use of raw materials such as such as iron ore and coking coal, the RBA report says.
Overnight, the price of iron ore fell below
$US55 a tonne for the first time since 2009 as concerns about an oversupplied market as big miners lift production and waning Chinese demand weighed.
Read the full article here
http://www.businessspectator.com.au/news/2015/3/19/china/rba-warns-chinese-property-market
(20min delay)