Less hungry dragon

22 March 2012 By Wei Gu

China’s manufacturing activity looks to have shrunk in March. As the economy cools, so will China’s appetite for globally traded commodities like oil and iron ore. The shift away from heavy industry, and exploitation of cheap domestic shale gas, should continue the trend.

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The HSBC flash purchasing managers index, the earliest indicator of China’s industrial activity, fell back to 48.1 from February’s four-month high of 49.6. New orders fell to a four-month low.
BHP Billiton, the world’s biggest miner, said on March 20 it was seeing signs of “flattening” iron ore demand from China. China’s demand for iron ore, a key steelmaking ingredient, will slow to single digit growth, it said.
Royal Dutch Shell said on March 22 it has signed a production sharing contract with China National Petroleum Corporation (CNPC) for developing a shale gas block in Sichuan province, the first such deal in China.

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