Credit Suisse analysts have spent a couple of weeks on the ground in Asia talking to some 40 participants about the state of the metals and mining industry in the region (producers, consumers, traders, etc.). Here is a quick summary:
"Worse than 2008: Even considering the optimistic nature of human beings, our discussions suggest a significant loss of growth momentum, leading to a continuously challenging environment, especially for steel makers, and to a lesser extent, mining companies, driven by
(i) compressed Ebitda margins,
(ii) weak demand for finished products, and
(iii) surplus steel capacity, which are all likely to remain in place in the mid-term.
Asian risk appetite has fallen, and consensus is that structural problems faced by the Chinese industry will continue, regardless of a potential breath of air from an expected minimum RMB 1 trillion stimulus package, which would bring temporary relief at best."