Against the Grain

Poor workmanship seems to be blighting that pillar of manufacturing excellence Japan, hard on the heels of Toyota it is reported a Japanese supplier of seats to Airbus and Boeing has to repair 150,000 seats because of falsified safety data. Its shares dropped 33% and its parent is a Toyota Motor Corp affiliate.

Metals shrugged off a poor close of US equities and advanced strongly in Asian trading with cu to the front on “arbitrage” buying. This would seem to be more a financial exercise as the fundamental news out of China was Minmetals Nonferrous Metals predicting Chinese cu imports would halve this year as the government unwinds the stimulus spending. The LME stock data again dominated by significant al withdrawals (US and Europe). Alcoa alumina and bauxite workers in Western Australia are staging a one day strike Thursday after wage talks stalled. On the corporate front the press has taken up the Xstrata / Glencore merger guessing game again. In Zambia vandalism is reported to have disrupted power to First Quantum’s Kansanshi cu mine (200 ktpa).  The strength in London has been attributed to hopes of EU help to Greece and comments that it helped emerging markets (not sure if Greece is classed as the EU or EM?). The EU council meets Thurs (reading this has been called early) so expect Greece to be on the agenda. By the pre market close metals were again dominated by the fax market drifting lower as the US$ gained above € 1.37.

Another data light day – in Japan Jan machine tool orders rose 192% yoy (Dec 63.4%) which perhaps say more about how dire this time last year, foreign orders leapt 290%. In China Jan car sales exploded by 115% yoy to 1.32 million units (Dec 1.1 million units and Jan ’09 610 k units), this perhaps supports the expected stratospheric rise in Jan bank lending ahead of the authorities turning the taps off. Put in your diary the World Expo begins in Shanghai May 1 to Oct 31, so nothing will go wrong in China between those dates. In the UK a survey of Jan retail sales had them down 0.7% (Dec +1.1%) as cold weather and tax increases kept shoppers away. In the US Dec wholesale inventories fell 0.8% against an expected rise (+1.5%). The weaker US$ and stronger US equities supported metal prices throughout the afternoon. In the last hour the US$ was hit hard and the equities jumped cleaning out all the metals shorts as newswire talk of a Wall Street expecting a Greek bailout. So its a case of beware of others bearing gifts to the Greeks!