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Chinese stimulus spending won’t save Aussie iron ore boom

A senior manager from China’s largest listed steel maker has said the government’s stimulus package will do little to revive Australia’s beleaguered iron ore sector.

Fairfax reports that Zhang Dianbo, a senior manager with Baosteel, issued the gloomy prognosis at an industry conference in the north-eastern city of Dalian.

According to Zhang China still suffers from a huge oversupply of steel and he does not expect the government’s infrastructure spending to provide a meaningful boost to demand.

“The government’s infrastructure investment may only improve sentiment … I don’t expect a big lift in steel demand,” said Zhang.

Australia’s major miners have been battered of late by the dismal performance of key commodities, with iron ore producers especially hard hit by a year-long plunge in spot prices.

Iron ore was unchanged at $104.20 a tonne on Wednesday having clawed back more than 20% of its value since hitting a three-and-a-half year low of $86.70 on September 5. This time last year the commodity was trading above $170 a tonne.

The biggest Australian iron ore producers – Rio Tinto (ASX:RIO), BHP Billiton (ASX:BHP) and Fortsecue Metals Group (ASX:FMG) were all in attendance at the conference, having recently expressed hopes that China’s stimulus spending could resuscitate enervated price levels.


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