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Takeaway: In our view, a much larger rally in steel, coal, iron ore and other key Asian commodities would be need to improve $CAT's 2013 outlook.

Chinese Construction Materials Prices Rally (Back To 2009 Lows)

  • Investor Area of Focus:  We have received questions on the bounce in construction materials prices in China, suggesting that positive sentiment for mining equipment producers remains at healthy levels. 
  • CAT Guidance: Caterpillar will give 2013 top-line guidance when it reports this Monday.  We believe there is a high probability that management will disappoint, although we note that consensus has dropped significantly since our September 14th Black Book.  We will also be looking for trends in implied orders and order cancellations/delays.
  • Bounced How Much?:  We track real rebar prices, among other indicators, to get a real-time sense of Chinese construction activity.  The rebar price agrees with land sales, construction equipment sales and company comments (e.g. Danaher and American Express today):  Chinese activity continues to be weaker than expected.

Chinese Construction Materials Prices Rally (Back To 2009 Lows) - rebar update

Jay Van Sciver, CFA

Managing Director


HEDGEYE RISK MANAGEMENT
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New York, NY 10012