Chinese stimulus and iron ore

ANZ released an interesting note late yesterday on the prospects for a rebound in the iron ore price in second half. The note is interesting on a couple of fronts. Firstly, there are some mixed messages coming out of the bank about China’s iron ore stockpile. Regular readers will recall a recent video with ANZ staff exposing worryingly large overflows of iron ore at a large Chinese port. However, this note is much more sanguine about the glut. Secondly, there is some good quantitative data in here on the stimulus measures already announced.

I’m not as bullish as the note, though acknowledge the possibility of a rebounding ore price, which we have already seen in  muted way:

My reservations are around the effect of a further slide in global growth and what that would do to iron ore despite Chinese stimulus, such as it is. Anyway, worth a read.

Greater China Weekly Insight, China Fiscal Spend to Boost Iron Ore Demand, 5 June 2012 (1)

Houses and Holes

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.

He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.

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  1. Tiges in 2012

    Assuming that China’s monetary multiplier remains unchanged at around four, …” etc. etc.

    Perhaps we could get DE writing about China. Both bulls and bears reproduced here use discredited neoclassical frameworks.