CWT to suffer from sluggish demand in China

Might be shaken by Chinese credit crunch, too.

According to Maybank Kim Eng, it is now expecting overall yoy volume growth for CWT's commodity trading segment to come in around 30%, as increases from market share gains and naphtha, a new product, will be weighed against overall weaker demand in China, where most of MRI’s customers are.

Here's more:

Growth on commodity trading impacted by weaker demand. We are now expecting overall yoy volume growth for this segment to come in around 30%, against our previous assumption of 60%.

The growth will come mainly from the addition of naptha to its trading portfolio, with existing base metals (lead, copper, zinc) seeing single-digit percentage increase.

Most of MRI’s customers are based in China. We understand that there is a dampening of overall volume demand in the country, partly due to fundamental factors as well as a decrease in speculative buying.

The latter has been affected by the tightening liquidity in the country. For MRI, copper accounts for more than 70% of revenue and for this product, most of the customers are smelters. The decrease in speculative buying will impact lead and zinc, the other products in its portfolio harder.