How many times this year have we seen the price of copper smacked down because apparently "China is slowing". Yet, month after month I see no significant improvemnt in the copper inventories to support this thesis.

This quote does make me go hmmmm... so that is what is happening. "China appears to have found that someone just has to say the words "slowing down" or report lower GDP or other numbers, and it results in weaker commodity prices. You can buy what you want for less, even if you buy more, you still pay less, as in higher demand can result in lower prices

The second part referst to how no one seems to question China's GDP numbers.

...

The following is taken from an article: http://www.eagleres.com.au/images/pdfs/Comments/2014/era3oct14.pdf

At China Mining Nov 2008, iron ore imports "were expected to flatten out" in 2009 and 2010, at the same level of 2008s (ie 435mt to 465mt), but in fact steadily rose to 550mt to 600mt, and "had peaked", as later remarked - "there would be no imports above 600mt". At China Mining Nov 2012, China was "slowing down and iron ore imports would peak at 700mt", whereas in 2013 they rose to 800mt.

At a recent September 2014 conference in Melbourne the CISA stated that "iron ore imports would peak" at 870mt (which is double that of 2008 and the "flattening out that was going to occur in 2009 & 2010), although 2014 would be an aberration at 900mt - that's why iron ore prices have weakened in 2014 to ~$80/t and are expected to remain weak in 2015, because "imports have peaked and China is slowing down" - sound familiar?.

China has been slowing down and importing more since 2008! China's manufacturers must be laughing all the way to the bank. Speak to any iron ore producer and they usually, "China is not turning the ships back, they take everything we produce". Even RIO stated there would probably be price pressure due to recycled scrap from earlier buildings, but that's not a new/additional concept.

However, it also to be recognised that China has undertaken numerous significant construction JVs with almost every country in the world that welcomed them with open arms in 2013. That construction is produced in China and shipped for use, but does not appear to form part of China's GDP.

China appears to have found that someone just has to say the words "slowing down" or report lower GDP or other numbers, and it results in weaker commodity prices. You can buy what you want for less, even if you buy more, you still pay less, as in higher demand can result in lower prices (provided the market thinks you are going to reduce demand and result in an oversupplied market, or "make noise in the east, and attack in the west" - "literally").

----------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------

At the Gold Congress, a delegate stated that they were surprised that no one questions China's GDP numbers that are produced ~2days after the end of a period such as a quarter - Japan is super efficient, but it still takes them close to 3 months or so to produce their initial GDP numbers. The delegate's understanding was that China's GDP etc numbers are a broad guideline, can be top-cut, have different compositions and are weighted by Province too. Similar comments have been made in other conferences that I have attended, and I wrote a Paydirt article on GDP numbers earlier this year (2014) and available on the Eagleres website : www.eagleres.com.au).

In 2011, China's GDP was reputedly ~US$7.32trn. According to Figure 9, it appears to have been US$9.18trn in 2013, ie 25.4% higher - surely that's more than 7.5%pa. I agree China is not in frantic growth/construction mode, however, steady construction is in progress, take the Beijing underground/metro for example which still costs Rmb2 per journey anywhere on the network, Line 14 is under construction and expected to be opened in the coming year, to add to the fully automated network of trains travelling ~ 2 - 3 mins apart, as in Figure 32a over the past ~9 yrs.

I can't believe all that construction I saw in November 2013 has ground to a halt in Xian and Zhengzhou etc (available in a Paydirt report on the Eagleres website : www.eagleres.com.au/paydirt/item/dec-2013-supercycle). As I have said before, just because it is not visible to you, does not mean to say it has stopped or slowed down, where you are may have been built and completed. Guomau in Beijing continues to resemble Manhattan, with China World 3 in progress, Soho done and that other complex in construction.

Figure 32b shows a picture of Yantai (on the Jiaodong Peninsula of Shandong Province) from the 30 Sept 2014 issue of the China Daily. I first went there in about 2004, when it was so small (at ~2m to 3m people) that it was not on maps of China, and was little more than a fishing/tourist village/town with 5 cabs, 3 hotels and almost no one spoke English (the roadsweeper did). Now Yantai is a major fruit growing area that in 2013 yielded ~4.95mt of 120 varieties of apples (mostly red Fuji), for $2.1bn (RMB 12.7bn), which was about 6% of the total food industry revenue at Yantai, ie RMB170bn(~$28bn) from over 528 enterprises. The target expectation for 2017 is RMB300 (US$50bn).

Yes, car consumption is reducing and seen as another sign of slowing down - but in Beijing that's partly because there is a limit on the number of licences to buy cars, to reduce potential pollution - as someone remarked on a trip I went on, how come there are no old cars - they're all new - and yes, they are. Some people have been waiting over 2 years in Beijing to get a licence to buy a car.