Gulf diplomatic sources in New York, told Al-Akhbar that they are concerned about the U.S. pressures on the Gulf-countries to absorb the currency liquidity available in their banks.
The United States sent harsh messages to its Gulf allies demanding serious contribution in Bush’s financial rescue plan to prevent the complete collapse of financial markets.
Especially after Qatar Investment Authority rejected the investment of part of its assets in the U.S. market, Preferring to invest in Asian markets.
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Steel industry in China crumples
John Garnaut
September 30, 2008
THE head of China's leading steel company says the Chinese economy and steel industry are both "heading for a downward slide", as hopes fade that China can insulate Australia's resource-dependent economy from the widening global downturn.
The comments by Baosteel's chairman, Xu Lejiang, coincide with new evidence that a contraction in Chinese building construction is seriously crimping demand for Australian commodities, like iron ore.
"The economy is heading for a downward slide, so the steel industry is certainly heading for a downward slide," Mr Xu told the Herald at a Baosteel conference in Shanghai.
China recently emerged as the engine of the global economy after seven years of uninterrupted, accelerating growth. Australia has been a particular beneficiary because of the resource-intensive nature of its urbanisation and industrialisation.
But severe credit rationing by the Chinese Government, which has helped to quell an inflation break-out, has coincided with the worsening global financial crisis to smash the confidence of Chinese real-estate investors and the building plans of residential construction companies.
Residential construction accounts for about one-fifth of Chinese steel demand.
The research house Mysteel said yesterday the Chinese steel industry was in recession. Prices for steel products had fallen 15 to 20 per cent since July.
The Tangshan spot market price for imported Indian iron ore has plunged below $US110 ($134) per tonne, down from $US195 in early July.
Yesterday, the falling Chinese demand for imported iron ore had cut Australia-China bulk freight rates to as low as $US13 per tonne, from as much as $US50 midyear.
Reading the Chinese economy is even more complicated than usual because the Government shut down a large proportion of industrial and mining activity across northern China for the Olympic Games.
But property sales have declined steadily since early this year and property developers are struggling to raise finance for new projects and to complete existing ones, while China's export sector has been weak since early this year.
Most seasoned analysts remain confident about China's long-term growth trajectory. But the next few months are likely to be bumpy, particularly for companies and sectors linked to its building industry.
"Patience is necessary because October will deliver a steady drip of depressing data from China - but this does not dampen our expectations for continued healthy (8 per cent-plus) economic growth next year," said Andy Rothman, an analyst with CSLA in Shanghai, in a research note yesterday.
Mr Xu said he had no plans to cut production but warned that steel prices were "plummeting".
"A very large number of small steel mills are cutting production," he said.
For the first time in more than five years, Chinese buyers can purchase spot market Indian iron ore as cheaply as Australian iron ore on long-term contracts, including freight costs.
Some observers believe contract iron ore prices will fall next year, for the first time in seven years. "We've always said that by the time we break the benchmark price-setting system, the boom will be over anyway," said an Australian mining executive.
BHP shares fell 4.46 per cent yesterday, Rio Tinto shares dropped 5.45 per cent and Fortescue fell 6.35 per cent.
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