Korean steel giant Posco has cut production for the third straight month. Uh oh.
Bloomberg reports that Posco is cutting stainless steel production by 25%. It's doing so doing in response to falling demand. Finally, the slow down in the U.S. and the weakness in Europe (especially in Germany and the U.K.) may be catching up with steel.
Will this lead to lower demand for Australian iron ore? The market seems to think so. It sent basic materials producers all over Asia much lower. The "slower global growth" story is clearly on trader's minds.
You wouldn't have guessed there was anything to worry about based on the bullish figures released yesterday by the Australian Bureau of Agricultural and Resource Economics (ABARE).
"Currencies like the Australian and New Zealand Dollar are [therefore] suffering a huge double-whammy," writes Steven Barrow for Standard Bank in Johannesburg.
"Commodity prices are tumbling and the markets assessment of 'risk' is rising. These currencies have already been pummeled, but we see little hope of a significant recovery, especially against the [zero- yielding] Yen. The fact that both central banks are cutting rates as well is also worrisome for these currencies.
Commodity index investors, blamed for record oil prices, sold $39 billion worth of oil futures between a July record and Sept. 2, causing crude to plunge, according to a report released today.
The work by Michael Masters, president of the Masters Capital Management hedge fund, blames investors who buy and hold an index of commodities for driving prices to records and for their subsequent drop. It comes a day before the U.S. Commodity Futures Trading Commission is set to discuss its own study of energy trading with a congressional committee.
Dan Denning
for The Daily Reckoning Australia
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About the Author
Dan Denning is the author of 2005's best-selling The Bull Hunter (John Wiley & Sons). He began his financial publishing career in 1997 and has covered financial markets form Baltimore, Paris, London and, beginning in 2005 Melbourne. He’s the editor of The Daily Reckoning Australia and the Publisher of Port Phillip Publishing.
