CISA Supports Strategic Iron Ore Stockpiles

The CISA has called for the government to use its foreign-exchange reserves to build strategic commodity stockpiles, including iron ore. Large amounts of ore can be bought when prices are relatively cheap to guard against a monopoly from global mining companies. The steel lobby also urged the creation of a special department in charge of outlining relevant policy and management system.

However, the idea has triggered a debate. A skeptic noted judging from the experiences of oil and soybean, China's decision to store the iron ore could stimulate speculative hot money in this market, causing the prices of iron ore to further pick up. Domestic steelmakers may face even greater pressure on input costs.

In addition, the proper implementation of the policy requires coordination from many departments to determine when to buy in, and at what price, which is by no means an easy task.