March 11, 2009

In the last three months, China is importing more and more raw materials, such as copper, iron ore, steel, nickel etc. The China PMI index rose the second time in a row. According to a news briefing on Monday, China's electricity consumption in Janunary was also rising by 4.4% compared to same period in 2008. It is clear that more signs are pointing to recovery in China. There has been a significant rise in Chinese demand for refined Copper imports since the last three consecutive months. Imports reached a record 211,527 tonnes in December 2008, up 89 percent more than December 2007 and 49 percent higher than November 2008. Many analysts are starting to believe China's stimulus package is working as planned, which signals to investors that US $787B stimulus will also work.

OK, Who is doing raw material business in China?

Cliffs Natural Resources (CLF), The company produces iron ore pellets and supplies metallurgical coal to the steelmaking industry primarily in North America and Asia. The company also owns Portman Limited, an iron ore mining company in Australia. In addition, it has a 30% interest in the Amapa Project, a Brazilian iron ore project; and a 45% economic interest in the Sonoma Project, an Australian coking and thermal coal project. In the recent Q4 earning call, the company said: "we are maintaining the operating levels at over 8 million tons of production as we are seeing signs of demand on a customer-by-customer basis in China". The company realized a 73% increase in revenues from Asia-pacific, mainly from China. Also recently the company has reopened West Virginia coal mines as ore inventory comes down and demand is coming back.