property market is increasingly looking like a bubble about to
burst, with potentially negative consequences for metals,
according to INTL FCStone Inc. senior analyst Edward Meir.
Chinas economy has a "few
shaky pillars," particularly housing, something the government
has also recognized, he said.
"It could be very nasty for
metals like steel, zinc and copper (if this bubble bursts)," he
told delegates April 25 at the American Copper Council meeting
China is the worlds
largest consumer of metals, which it has used to fuel its
China has imposed new taxes on
property sales for second homes and increased down payments on
homes in order to address the problem of its overinflated real
estate sector, Meir noted, pointing to dozens of "ghost cities"
built in China that arent inhabited, as well as
questionable loans in an unregulated wealth investment
"On the plus side, the Chinese
government has money to throw at the problem," he said.
But Meir noted slowing growth in
China and easing demand for commodities.
"The new Chinese leadership is
sounding almost liberal in its desires, but what will be the
impact of trying to increase competition, closing down
state-owned enterprises, reducing excess capacityand will
it work?" he asked.