China’s pollution push is working and that’s big news for our miners – by Matthew Stevens (Australian Financial Review – December 12, 2017)

After crunching a wealth of big data collected from a globe of imaging satellites, unmanned aerial sensors and land-based monitors, analysts at the Swiss investment banking giant UBS have concluded that China’s pollution controls are working, are likely to persist and might even become more widespread.

Assessing the short- and longer-term market effects on minerals and metals markets of China’s determined efforts to improve air quality over 28 of its dirtiest industrial cities sits a novel new challenge for the whole of the global commodities sector.

That the Chinese government’s move to more strictly enforce measures aimed at reducing increasingly dangerous air pollution will reshape traditional annual demand cycles is widely acknowledged by Australia’s biggest miners. But there is a whole lot less agreed certainty over how the very material manufacturing output cuts might reshape actual shipment and pricing patterns.

For the moment it feels like those that are being hurt, like the lower grade iron ore producers, prefer to represent this winter’s distinctly different trading patterns as a one-off and then anticipate that 2018 will see a return to historically normal annual cycles.

But even the big winners, like those in the premium coal and iron ore space who are earning what at first glance my appear to be counter-intuitive gains from co-ordinated winter slowdowns, are not prepared yet to offer a firm public view on whether this reward for quality will routinely recur.

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