Editor's Note: This is a brief excerpt from a recent institutional research note written by Hedgeye analyst Josh Steiner. Email sales@hedgeye.com for more information.
Chinese steel prices resumed their collapse last week. They fell 7.4% w/w and have now retraced approximately 2/3 of their rally since February. We continue to view China's reflationary credit push in 1Q as the proximate cause for much of the broader-based commodities/EM rebound.
So it's relevant that Steel prices are collapsing again.
Chinese Steel
Steel prices in China fell 7.4% last week, or 185 yuan/ton, to 2317 yuan/ton. We use Chinese steel rebar prices to gauge Chinese construction activity and, by extension, the health of the Chinese economy.
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Bonus chart ... Chinese Non-Performing Loans
Chinese non-performing loans amount to 1,392 billion Yuan as of March 31, 2016, which is up +41.7% year over year. Given the growing focus on China's debt growth and the potential fallout, we've decided to begin tracking loan quality. Note: this data is only updated quarterly.
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