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China buying up excess ore

Mining Weekly’s news feed included this Reuters story explaining the Chinese government is buying up excess metals for two reasons: 1) a bunch of China’s smelters have a bunch of it just lying around because demand is down; and 2) they can buy it up cheap because prices are so low.

At face value this is just another “oh the economy’s going to hell in a handbasket” story but if you dig a little deeper, it’s happy news for Cat in the long run because a) China is in effect putting a floor on the prices of a broad range of metals; and b) With all the surplus off the market, demand for mining gear ramps up more quickly when the economy turns around.

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Tom Mangan posted at 9:56 am December 19th, 2008 |