Chinese slowdown hits US miners and suppliers
Ailing economic growth in China is beginning to take a toll on miners and suppliers in the United States.
Dwindling exports to the Middle Kingdom across a swathe of US industries would appear to strongly substantiate reports that the Chinese economy has hit a rough patch.
Official data released last week indicates that growth in the third quarter fell for the seventh consecutive period to 7.4%, in line with the tepid expectations of analysts. Figures from outside China also indicate slowing growth, with growth in US exports to China for the first half of 2012 falling to 7% from 20% and 36% for the same period in 2010 and 2011 respectively.
According to the New York Times suppliers of mining equipment are being to feel the heat as a result, given the immense size of the Chinese market and its importance as an export destination.
Citing poor demand from China Indiana-based engine maker Cummins was compelled to reduce revenue expectations earlier this month as well as announce lays offs of up to 1,500 workers before the year's end.
China is the fifth biggest market for the company's excavators and trucks, and accounted for 8% of its USD$18 billion revenue last year.
Heavy machinery titan Caterpillar (NYSE:CAT) has also just reduced its sales growth outlook to a four year low, with CEO Doug Oberhelman imputing the company's diminished prospects to a slowdown now "spread across the globe."
In the mining sphere rare earth producer Thompson Creek Metals laid off 100 miners at its central Idaho molybdenum mine in Idaho earlier this month, impacted by a 30% price decline compared to the same period last year due to dwindling Chinese demand.
Thompson's woes attest to the widespread impact of vicissitudes in the Chinese economy. Although the company does not sell to China directly, poor demand from the Middle Kingdom pushed down prices, thus attenuating the rare earth miner's profits margins.