And it’s no wonder BHP Billiton has become more cautious.
The Chinese economy, its biggest market, is slowing, but it’s second most important, Japan, is sliding towards a dip back into the red.
Japan’s export growth slowed for a fifth month in July, adding to the impression that momentum in the world’s third largest economy is exhausting itself.
With the yen hitting repeated 15 year highs in the past month (the latest on Tuesday); economists say the slowdown, evident from February, can only intensify.
The July data indicates that Japan’s export-driven economic recovery may be moderating in the wake of a slowdown in Europe, the US and China.
Japan itself has slowed sharply, some economists claim the country is now in a recession that will last until the first quarter of 2011.
The stockmarket re-entered bear territory this week (down 20% from its previous peak) and fell further yesterday, touching new 18 months lows.
The second estimate of second quarter GDP showed a very sharp fall, dropping to an annual rate of 0.4% from 4.4% in the first quarter. That was a quarter on quarter rise of 0.1%, against 1.1%.
Exports have now slowed from the 43.5% increase in February, the peak gain from a year ago.
While Japan has posted a trade surplus for 16 months in a row, with the country’s last deficit of Y5.41 billion recorded in March 2009 slowdown has been accelerating since May.
The latest trade figures from the Finance Ministry show that exports rose 23.5% last month from July 2009, while imports were up 15.7%.
But that’s slower than the 27.7% rise in exports in June, and noticeably slower than the 26.1% rise in imports.
The figures show that exports fell 1.4% from June (which saw a 1.8% drop on May). Imports were down a large 3.5% in July from June as the rising value of the yen cut the cost of imports of raw materials like oil, gas, coal, iron ore, copper and the like.
But the value of imports of liquefied natural gas, iron ore and non-ferrous metals still rose sharply in July, driven by demand from the power and steel and metal industries.
It’s now likely that the value of exports will drop below those of a year ago around October of this year, further emphasising the extent of the slowdown.
Tokyo-based analysts say exports were a bit stronger than market forecasts, but they have been wide of the mark in recent months.
The resulting trade surplus was 804.2 billion yen ($US9.55 billion), sharply wider than May’s 365.6 billion yen and also more than forecast.
Exports to China rose 22.7%, while exports to the US rose 25.9% year-on-year.
In July, shipments of cars, iron and steel products as well as semiconductors posted double-digit percentage growth from a year earlier but at a slower year on year pace from June.
Cars, power-generating machines and auto parts led the increase in exports to the US.
Shipments to the European Union rose 13.3% in July, up from the 9% rate in June.
Construction machinery, computer parts and auto parts led the increase in exports to Europe.
Japan’s exports to Asia rose 23.8%, slowing for the sixth month from a revised 31.6% in June and a recent peak of 68.3% in January.
As seen in the previous month, higher shipments of semiconductors, iron and steel products as well as automobiles led Japanese exports to Asia.
Exports to China, the largest market for Japanese goods, expanded 22.7%, up slightly from the 22% rate in June, but well off the 80% pace in January.
Shipments of metalworking machinery, cars and semiconductors led the gain.
