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Thursday, August 13, 2009 1:01:00 AM
Readers who like to follow the macroeconomic underpinning
of the stock market will like this graphic from BHP Billiton,
the world’s largest diversified natural resources company.
This info fits rights in with the raison d’etre of this board.
Steel is an excellent proxy for general economic activity inasmuch as it is used in buildings, cars, and a variety of heavy equipment. China produces about 1/3 of the world’s steel, but this is not evident in the chart above because the y-axis in the chart is the year-over-year growth rate of steel production rather than the production per se.
What the chart shows is that Y-o-Y production growth in China (the dark green line) bottomed in Oct 2008 and by Feb 2009 had returned to 0%. The impetus for the upturn of the dark green line in the chart—and to some extent the impetus for the worldwide recovery in stock prices—was the large stimulus program in China for infrastructure projects.
The red line in the chart represents the Y-o-Y growth rate of steel production in all countries except China. Compared to the dark green line, the red line fell much further and took longer to recover. However, beginning in May 2009, there is some evidence that a recovery in non-China production may be underway.
of the stock market will like this graphic from BHP Billiton,
the world’s largest diversified natural resources company.
This info fits rights in with the raison d’etre of this board.
Steel is an excellent proxy for general economic activity inasmuch as it is used in buildings, cars, and a variety of heavy equipment. China produces about 1/3 of the world’s steel, but this is not evident in the chart above because the y-axis in the chart is the year-over-year growth rate of steel production rather than the production per se.
What the chart shows is that Y-o-Y production growth in China (the dark green line) bottomed in Oct 2008 and by Feb 2009 had returned to 0%. The impetus for the upturn of the dark green line in the chart—and to some extent the impetus for the worldwide recovery in stock prices—was the large stimulus program in China for infrastructure projects.
The red line in the chart represents the Y-o-Y growth rate of steel production in all countries except China. Compared to the dark green line, the red line fell much further and took longer to recover. However, beginning in May 2009, there is some evidence that a recovery in non-China production may be underway.
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