2012-08-22

Chinese steel prices continue to slide as trade deficits hit Japan and Indonesia

Japan trade deficit shows world economy 'serious'
Japan's trade with the rest of the world in July showed a shortfall of 517.4 billion yen ($6.5 billion), the largest ever deficit for the month and nearly double the 275 billion yen deficit that had been forecast.
The figure also marked a drastic reversal of June's numbers, when Japan recorded a small but respectable surplus of 60.3 billion yen.

The data showed "the recent trend in which weakness in China and Europe has been putting major downward pressure on Japan's trade is getting even more serious", said Takahiro Sekido, Japan strategist of Global Markets Research at Bank of Tokyo-Mitsubishi UFJ.

...By region, exports to the European Union plunged 25.1 percent year-on-year amid the debt crisis. Imports from the EU rose 10.6 percent, leaving Japan with a deficit of 95.2 billion yen with the embattled economic zone.
Exports to China fell 11.9 percent against a 3.3 percent rise in imports, making Japan's deficit with its biggest trading partner nearly double that in June at 250.1 billion yen.
Japan's combined exports to other leading economies in Asia -- South Korea, Hong Kong, Taiwan and Singapore -- also fell a sharp 14.2 percent.

Indonesia central bank raises deposit facility rate as trade deficit swells
Bank Indonesia hiked the deposit facility rate -- which is the bottom range for the central bank's monetary operations -- by 25 basis points to 4 percent, aiming to absorb liquidity from the financial system.

It also cut the duration for forward transactions for foreign investors to a minimum of one week, from three months previously, to help stabilise the rupiah.

The rules are aimed at managing the current account deficit to "reach a sustainable level", the bank said in a statement after meeting with government officials.

The move came a day after the bank held its policy rate at a record low of 5.75 percent as it aims to keep economic growth sturdy while stabilising the rupiah, one of the worst performers among emerging Asian currencies this year.

Trade deficits are rising all over Asia as Chinese demand slackens and overcapacity spills into the global market. On that note, after a brief breather, Chinese steel prices are again moving lower.


No comments:

Post a Comment