TSX:TECK.A - Post by User
Post by
smoking81on Jan 11, 2016 5:51pm
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Post# 24447937
coal
coalThe Chinese government has set ‘de-capacity” as the target for the steel industry in 2016. Premier Li Keqiang was quoted in the Xinhua news agency as saying that China must be “unyielding” in eliminating excess industrial capacity in order to make way for new growth engines. Premier Li said the country would carefully study market conditions to set a reasonable target for the next three years. This has definitely been shared with others before it was made public.
The central government has also stepped up environmental inspections at Heibei steel plants starting Jan 4 and continuing for some time, and as such, production (an thereby raw material purchases) are expected to come under further pressure. End users are already operating with very low iron ore inventory levels, and are only buying as needed. However, coking coal saw some restocking following a spate of mining accidents in China that has led to fears of increased mine scrutiny and domestic production curtailment. The depreciating Yuan has been factor to date. Insiders also know monetary poicy ahead of time. This is why teck is such a good target given the high liquidity and heavy influence of resource sector.