Mining catalyst: China’s new stimulus

Following the speculations on the increased provincial investment activity in China, the Chinese government (National Development and Reform Commission) has reportedly approved the stimulus package to the tune of RMB1trn (US$160bn). This money will be spent on steel intensive infrastructure, with at least 25 new urban railway and 13 highway projects expected to be implemented over the next few years. While the announced stimulus is dwarfed by the one introduced in China in 2008, its objectives are similar – propping up the slowing economy through the increase in fixed assets investments. The improved FAI growth should, in turn, lead to higher domestic steel consumption, reducing the oversupply risks within the global industry and therefore supporting the international steel pricing.

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