China Can’t Control Its Iron Ore Roller Coaster
Attempts to rein in this market are unlikely to succeed. Just like Beijing’s other failed efforts to regulate commodity prices.
Digging their own hole.
Photographer: VCG/Visual China GroupThe nine most terrifying words in the English language, Ronald Reagan once joked, are “I’m from the government, and I’m here to help.” For anyone involved in commodity markets, there’s a still more alarming version: “I’m from the Chinese government, and I’m here to stabilize prices.”
That’s reason to be highly skeptical that Beijing’s plans to rein in the wild swings in the iron ore market will succeed. The government is developing a state-backed platform to coordinate all Chinese purchases of the steelmaking material, people familiar with the matter told Bloomberg News this week. In theory, that would give more bargaining power and stability to the country’s mills, which spit out more than half the world’s steel.