From Bloomie:
China, the world’s largest buyer of seaborne iron ore, may introduce a nationwide subsidy for local producers of the steel-making commodity amid slumping prices, according to the official Shanghai Securities News.
…“The subsidies, if implemented, will sustain domestic production, increase the global supply of iron ore and result in prices slumping further,” Wu Zhili, an analyst at Shenhua Futures Co. in Shenzhen.
The Australian is reporting that:
Details of the exact subsidy remain murky with some reports claiming lower quality iron will be compensated more and others predicting a blanket 6 yuan per tonne across all types.
6 yuan is about 2%. Doesn’t sound very high but the point is the principle. Once started it can be tailored to sustain local production at any price. It’s bad news for big iron.
Not that shares care. Fundies will need there faces pressed up against the oncoming lorry before realising its there.
