Singapore turns bearish as China woes mount I travelled last week to Singapore thinking the mantra of each of my visits over the past two years would repeat itself: "China trumps Greece in the commodities markets; do not worry about falling demand and prices." Yet, this time it was all very different. Yes, China trumps Greece in commodities. But the story about China is bearish, not bullish as in the past. To my surprise, I found Singapore-based traders as worried about the economic outlook as their Europe-based counterparts. Chinese economic growth slowed down to 8.1 per cent in the first quarter from the same period of 2011, the weakest rise in nearly three years. And other key economic indicators followed by Chinese policy makers, including electricity consumption, rail cargo volumes and disbursement of bank loans, point to a sharper slowdown in the second quarter of the year. Over a week of meetings, Singapore-based traders and executives told me about a "slowdown in demand in China and India"; "pretty bearish sentiment"; "plentiful supply"; "mounting" inventories; "hand-to-mouth" consumers in Asia, and "defaults and deferrals" in shipments. Almost the opposite story of the last two years, when China and the region were booming and traders asked me what was the deal with Greece. "The bears are winning the game and I think they will continue to do so for a while," summarised the regional head of commodities at a top Wall Street bank. Few executives painted a positive short-term outlook, although some were upbeat, saying that probably the market has hit the bottom and commodities demand is likely to improve from here. The rosier outlook has some foundations: the Chinese authorities have started to take some measures to reactivate economic growth; commodities prices had fallen between 10 and 25 per cent from their peak two months ago, providing an incentive to buyers, and the seasonal uptick in demand of the second half of the year should also help. Although commodities traders and executives were bearish about China and - with some exceptions - India, they were far more positive about countries such as Indonesia, Malaysia, Thailand and the Philippines. Moreover, some of the drop in demand has been exaggerated as Chinese buyers, cushioned by high inventories at home, hold off their purchases on the hope of lower prices, creating a downward spiral. At some point those consumers would consider prices attractive enough, providing a floor. The same is true about the deferrals and defaults. Commodities traders believe they reflect more the fact that Chinese buyers are forcing lower prices on their suppliers, breaking their contracts, than a significant drop in demand. As the saying in China goes, "It is not a bad price, it is a bad contract." Yet, for all the caveats and hopes, the picture about commodities demand in China does not look as strong as has been the case over the past two years. That certainly is a problem because China indeed trumps Greece - and almost everyone else - in commodities.