No one can confidently predict the long-term prospects for global revival of the ferrous and non-ferrous metals sectors. “Analysts” send out mixed signals; some of which are manifestly intended as a boost to investor confidence, while others continue warning against optimism while the unprecedented meltdown in actual demand for metals – in infrastructure, other construction projects, and for transportation – continues.
But China’s mining companies are taking full advantage of the current current “bear” (buyers’) market and have been acquiring further significant stakes in overseas mines and mineral projects. It is logical to see this “new wave” of foreign forays as, at least a partial, response to the state’s recent problems in securing a pre-eminent hold over iron ore stocks.
Between May and the end of July, China’s Iron and Steel Association (CISA) – the world’s leading purchaser of iron ore – tried to reduce the cost of these imports, but didn’t succeed.
Not only is the association organisationally weak; as well as contending with pressures from the Big Three producers (Vale, Rio Tinto and BHP Billiton), CISA also had to view with its own private steel mill owners. And these apparently made individual agreements with suppliers who were prepared to pay so-called “spot” market prices, at higher rates than CISA was pushing for.