An interesting quote…

Michelle Obama’s Strange Message

Maybe I am just a bit paranoid, but the quote written on the journal that Michelle Obama gave to Laura Bush give me chills when I read it.
 ”There will come a time when you believe everything is finished. Yet that will be the beginning.”
If that’s not a weird, anti-establishment slogan with a ring of social reengineering to it, I don’t know what is.

China growth…a thing of the past? Looking to electricity demand for clues

Chinese electricity growth and GDP growth had a .99 correlation from 1991-2007. Last year, electricity growth was 5.5% while GDP was up 9.5%. In January Chinese electricity growth was DOWN 13%. The first two weeks of Feb did rebound to be slightly positive, but the January number is truly staggering. There might be some effect from the holiday calendar, but it is a YOY analysis so the effect should be negligible. 1st quarter GDP numbers wont be available for a few months, but I don’t’ think you need to wait that long to draw some scary conclusions. While I have long doubted the official Chinese numbers on both statistics, it is a relationship that makes sense and should be followed.

Great news for coal and America? Strip mining is back!

Did anyone really think they could keep King Coal down? After environmentalists won a court case virtually ending the practice of “Mountain Top Mining”, leave it to the appeals court to come through and save the day. For those unaware, you actually need a special permit (”404″) to knock off the top off of a mountain, use the debris to fill in the valley below, and mine the freshly unearthed coal. Who knew?

The 4th Circuit Court of Appeals just overturned the previous court ruling that halted the issuance of 404 permits which put into question the future of mountain top mining in Central Appalachia.

What it means? Cheaper coal prices, which the industry needs right now to stay competitive with all of the funding for renewables and things like carbon credits. It also means they can close some of the more expensive, more dangerous underground mines. I guess thats a good thing. But it also means more valleys will be filled. Oh, and there may be some ground water issues but we’ll have to wait and see on those.

World steel production in free fall

Jan 09 down 24% YOY and 38.8% excl. China.

China was up 2.4% YOY and now represents an astounding 48% of world wide steel production. The U.S. is sitting at roughly 5%.

Other key stats include:
Brazil down 45.6% YOY
Japan down 37%
EU down 46%
Rus&ukr down 47%

Case-Shiller Dec Data – Down Everywhere

Todays release of the Dec 2008 Case Shiller home indices showed little relief for home owners. Large monthly drops across Phoenix (>5%), Las Vegas, and Miami overshadow the more important changes in the numbers. The average New York City price had its largest drop and largest % drop since the index was created. The exceeds November’s numbers, which also were records at the time.

For the largest 10 and largest 20 city indices, the monthly declines continues to be greater than 2% per month.

Global Steel ex China looking weak

Global Steel Production:  In December, Non-China steel production showed both a monthly (down 13.8%) and yoy decrease (down 35.4%) as expected.  China’s crude steel production was up 10.9% from November, though full year 2008 was only up 1.7%.

The fact that world wide steel production ex China was down 35.4% over dec 2007 is truly amazing. Coking coal prices tripled for most mills through the third quarter of ‘08 so perhaps you can blame some of the decline on a rise in costs, but one would have expected to see that effect starting as early as August. Additionally, by Dec8, shipping and spot market prices had dropped the net price back from 375/t to 175/t which should have spurred some demand. 

Full year production worldwide was only down 1.5%, but the comps are about to get very ugly over the next few months. I don’t see how the global steel conglomerates can survive after their frenzied acquisition binge of the last few years. The Chinese growth numbers cannot be overlooked and do represent some positive developments, but I take long-planned government spending with a grain of salt.

TAYM