More On China's Iron Ore

Rising commodity prices increase the equity of existing commodity stockpiles.  When prices stop rising - not necessarily when they start falling - they may pose credit extension issues for leveraged traders.  Sober Look has an interesting insight into this phenomena:

Moreover, some traders supposedly used the same iron ore and steel inventory with multiple counterparties at the same time (equivalent to taking out multiple mortgages on the same house at once). 

With banks cutting back lending in this sector and the yuan actually declining recently, that gravy train has stopped. Traders are being forced to dump inventory. That is sending prices lower and even pressuring some mills to close.

I'm interested in seeing how the exchange rate with the US dollar goes.

China/US currency trade ratio.

China: Iron Ore

Another Chinese commodity stockpiling story from Bloomberg:

“The risk comes when metal prices fall by a large magnitude within a short time, driving down the value of the collateral,” Yang Changhua, a researcher with Beijing Antaike Information Development Co., said in a Feb. 19 interview. “Borrowers, forced by their bankers to repay loans or to top up collateral, will have to sell the metals, sinking market prices even further and begetting a vicious cycle.”

A vicious cycle, indeed. 

PIIGS Unemployment

I've been busy with a new musical instrument, work and personnel life - they have all been colliding, so I hope it does not affect my music.  So, I have not had my usual time to look at the charts, but I have been looking at some of the EU unemployment figures - especially that of the infamous PIIGS.  Conditions have improved in Ireland and Portugal but unfortunately for Italy, Spain and Greece there is not much I can say whether conditions have become better or worse.

PIIGS unemployment since January 2003.  Greek data go to October 2013, all others December 2013.

Being unemployed in Greece has become a full-time job, so it would seem.