Chinese Economics Thread
- Thread starter Norfolk
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broadsword
Brigadier
Sick man can jump
Just a small point. It's retail investors, not retailers
Steel prices have gone done due to Li Keqiang's effort, so it seems.
Seems that the government gave steel traders stern warning and it works for the time being.
But this is something not convincing at all. What is there prevent the next cycle and so on. Wouldn't it be better if the government establish gigantic reserve for iron ores in various part of China and use the reserve to intervene just like that of the central bank?
Seems that the government gave steel traders stern warning and it works for the time being.
But this is something not convincing at all. What is there prevent the next cycle and so on. Wouldn't it be better if the government establish gigantic reserve for iron ores in various part of China and use the reserve to intervene just like that of the central bank?
Yes it's true. But it's a colloquial which is why I mentioned as retailers. Yes it's not retailers as in the traditional sense. But fund managers refers to private investors as retailers. That's what the all call them when I've meetings with them back in the days.
Right now Brazil has lower production because they have been hit by COVID-19. That is one of the reasons why the prices for iron ore have gone through the roof. China did a smart thing in putting taxes on steel exports. That is going to reduce steel production. Add to that the crackdown on steel production with the excuse it is to combat pollution and I think the iron ore price will crash more.
The fact is even if China pauses its infrastructure construction for a couple of months it will make little difference long term. In the meantime production in Brazil should pick up. One way or another the Brazillian population will get immunized. Either the vaccines do it or the virus itself will.
Reserves would have helped if the government purchased ore when it was cheap. Now that it is at almost quadruple the price reserves are useless. In the long term the government simply needs to increase global iron ore production and the mines being developed in Guinea would be one way of doing it. If the Australians think their iron ore position is eternal, well, just look at this chart.
Look at how quickly Guinea ramped up its bauxite production. It might take the Chinese half a decade or even a decade to develop the Guinea iron ore resource but eventually they will become a major producer of iron ore. The fact is, the Guinea iron ore mines should have been operational for at least a decade already. But the development was being done by Rio Tinto, who also operate Australian iron ore mines, so they were not interested in Guinea iron ore mine development because it would reduce their profits. Rio Tinto dragged their feet in developing the mines. They were granted the license by the Guinea government in 1997 and they simply sat on it. Two years ago the Guinea government took half the lots and licensed those to a Singapore-French-Chinese consortium which will definitively develop the mines.
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The problem with Guinea and many such countries is that they are prone to political instability and turmoil.
Regime change and other nefarious activities will be deployed to disrupt iron ore production when it is in the interest of the 5-eyes nations.
Bringing in European partner, particularly France will help to mitigate such risks. It is a pity that large neighboring countries like Russia and Kazakhstan do not have much iron ore deposit.
Regime change and other nefarious activities will be deployed to disrupt iron ore production when it is in the interest of the 5-eyes nations.
Bringing in European partner, particularly France will help to mitigate such risks. It is a pity that large neighboring countries like Russia and Kazakhstan do not have much iron ore deposit.
Look like the crackdown on monopoly and tech giants might be more beneficiary as these companies now have to invest heavily into the area including AI, cloud computing etc.
As predicted, Chinese companies no longer want to ramping up supplies as the rise of raw materials prices make profit margin slim and political uncertanty. This would push up their abilities to increase prices in the future and start exporting inflation.
As predicted, Chinese companies no longer want to ramping up supplies as the rise of raw materials prices make profit margin slim and political uncertanty. This would push up their abilities to increase prices in the future and start exporting inflation.
The tools US uses to create turmoil can also be used by China to protect its interests. What matters is conviction. If China is serious about protecting its interest they can stop any such disruption.
Regarding Regime change, US no longer has the ability to do that the way they used to before. They failed to do that in Syria and Venezuela.
All i want is China to have a better foresight and not have a reactive foreign policy. Just few years ago i saw how State Media was going gaga over the China-Aus relations. Now look where we are.