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Southern Copper Corp. Message Board

  • slegermark slegermark Mar 13, 2012 2:17 PM Flag

    More articles appearing about China's slowdown

    I am wondering if there is an effort to put the bull market into a "correction" by scaring investors out of basic materials. I do not see the necessity of a correction because most basic material equities are within parameters of what we would call value.

    Desirable PE, revenue to debt, book to debt, yoy revenue growth.

    I read an article a while back about how the movers get it going by proxy. Many of the article writers do not even know what is going on, they want to show off how smart they are and then go at it like a good technicians.

    Let's see if this link works. Last time it truncated and led to a dead end. An extraneous space occurs in the word manipulation, it might have to be corrected for the link to work.

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    • I rarely read Yahoo's boards as a great majority of the comments are just ridiculous. I found your comment, and some of the responses, to be quite insightful and a model to what the board should be.
      As for the link, just delete the underscore in "stock_manip_ulation.htm" and it works.

    • Rog,

      My final post on the topic.

      "...just be careful about letting a “red mist” influence your statements."

      That's a perfect example of what I scolded you on earlier, what exactly do you mean by "red mist"? Was that political commentary, red-state vs. blue state? Sheesh, Rog, I don't know, maybe it was some hip cool slang expression. The Urban Dictionary defines red mist as: "A feeling of extreme competitiveness or anger that temporarily clouds one's judgment. " Is that what you're referring too? You obviously have an opinion -- just state it and be done with it!!!!

      FYI: "9-11" was introduced into this discussion when it was suggested that the Bush administration was using the terrorist threat and the Gulf Wars as an excuse to rebuild the military industrial complex. My intent was to explain to this individual that the terrorist threat was (and continues to be) quite real and that it is necessary for the U.S. to have a strong defense structure. The Cold War was real, not made up. Vietnam, Korea and WWII were not created so we could have a military industrial complex.

    • Roger,

      "... you extrapolated way too much from the post. "

      Then try to be more to the point in your writing, your meaning and intent is hard to decipher.

    • This week's market movement is what I was getting at. A preponderance of articles pushing for a market pullback. With enough articles over long enough time, it happens. Just like WMD rumors and the necessity for borrowing chinese treasure for war. Weeks like this I sell nothing. Maybe buy some calls when it dies down.

    • I couldn't find all of the articles I posted earlier, but found quite a few interesting ones that I missed the first time around. China's auto industry, in particular, is far more complex than what most of these so-called analysts realize. On the one hand the demand is there, on the other, the government wants to throttle-back production and get domestic producers on board with better few economy and cleaner vehicles. It's not just a simple case of a "slowing economy".

      China Car Times article from last fall discussing quality issues.

      NY Times article from last Fall addressing government's desire to purposely slow down auto production and focus more on efficiency and pollution control issues.

      Couple of nice general-purpose sites covering China's auto industry. Scroll down to article discussing number of registered autos increased 16.4% in 2011. Another article further down declares passenger car sales expanded 25.2% in February. reading this material, I'm not getting a sense there's a big slowdown in their auto industry; if anything, it appears to be just the opposite.

      Here are a few articles addressing appliance manufacturing (big copper consumer):

    • Yes, I've read a lot of those stories and most are based on two false arguments: 1) Slowdown in appliance / durable goods manufacturing; 2) Slowdown in domestic auto production.

      The government recently ended a stimulus program to get people to buy more appliances, but the savings amounted to around 10% on most products. Some analysts interpreted this as a way to move unwanted inventory. In reality, the govt. is pushing people, especially in the rural areas, to buy appliances as a way to improve general health, farming efficiency and as a way to encourage rural electrification . It was said the program ended last year but that's not entirely true, it will continue through this year in the rural areas. Appliance dealers have since put on more discount sales to bring additional customers back into the stores. Appliance manufacturers see this lull as a temporary thing and expect factory output to pickup sometime in the 3Q or 4Q this year.

      China's domestic auto sales was in decline most of last year. Once again analysts took this to mean the economy was slowing down. The reality is the Chinese are very discriminating customers when in comes to quality; they steered clear of domestic brands due largely to poor quality. What a lot of observers didn't realize was that auto imports INCREASED by 27% last year -- the market is there, demand is there.

      The real estate sector is a different story with plenty of unoccupied office, retail and housing space (new shopping malls, even entire newly-constructed cities remain largely unpopulated). But this is not an issue of over-supply, it's an issue of price manipulation by the banks and real estate interests -- there are plenty of people ready to move into these properties, but none can afford the ridiculous prices. Never the less, this is not a new issue and has been going on in China for quite some time.

      As I stated before, China is undertaking to build a huge military industrial complex and striving to put together a blue water navy of sufficient size to project "influence" anywhere in the Pacific -- all with the stated purpose of pushing out the U.S. We can laugh at their early attempts at an aircraft carrier (built on an old Russian hull with no planes to launch) but these are just first steps.

      I posted a bunch of links on this stuff a while back, not sure where though. I'll put them up again if I can find them.

      • 2 Replies to bigmoneymine
      • China's so called massive military buildup is nothing more than media hype generated by our own Military Industrial complex desperate to find a new enemy to justify their own massive defense contracts. When the Soviet Union collapsed the defense department was desperate to find another enemy, finally settling on a "War on Terrorism" as their best alternative. This is getting stale so they need someone new. Looks like China is the likely candidate. The USA still spends more on defense than the entire rest of the world combined !!!! Think about that for a minute.

      • I like a lot of your bigger thought processes surrounding China, their car market (thriving by any measure!), and the world economy.

        I own a substantial position in SCCO for many reasons. Here are a few:

        1) Copper ore grades are declining. That's a documented fact. SCCO has some of the lowest costs per pound with the highest ore grades.
        2) SCCO can add capacity faster than most. Huge reserves, controlled by a small group of wealthy Grupo Mexico folks.
        3) India and China together have more than 163 power plants in the planning and design phase. They can't keep up with power demand. Fully 1/3 of the world population lives there... and they all want refrigerators, appliances, cars, nicer homes, and of course, TV's, iPads, and cell phones (all copper-intensive items).
        4) Throw in point 3 concepts for Brazil and Indonesia (raising the popluation pie to 1/2 the world....) you start to appreciate that copper will be in substantial demand for the next 30 - 40 years.
        5) Data center "co-location facilities" are growing by leaps and bounds. Think Google, Microsoft, Apple (think iCloud), Facebook, NYSE, CME, Savvis (now CentryLink), Equinix, Telex, etc... All are building purpose-built facilities as datacenters to house purpose-built technology for their own delivery platforms and services. Data center co-location and/or outsourcing is a trend that is only picking up speed within the world. This drives efficient use of power and.... the proper implementation of HUGE copper intensive materials.

        I'm old enough to remember a popular saying: "All boats rise in a world-tide-economy that progresses together." If that's true, then one need only hope that the tide rises significantly while one lives and can invest in such economic super-cycles. I believe copper, in general, is on the front edge of a much longer economic super cycle.

        I could be wrong. But there is too much evidence that points to copper being in a much more elongated demand cycle. Of course, there will be price manipulation and supply gluts and droughts along the way.... but I believe the long term trend is up. Additionally, as evidenced over the last 10 years.... SCCO tends to be more "shareholder friendly" (the last dividend move not-withstanding).

        My 2 cents.

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