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Chinese Companies May Face Iron Ore Collateral Call
From the Buzz & Banter: Traders may be forced to sell.
Professor Pinch    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

A horse, a horse, my kingdom for a horse!

-- Richard III, William Shakespeare

Those were the words famously yelled out in William Shakespeare's play Richard III. They may be heard again as Chinese traders, who
have been pledging iron ore for collateral, are being forced to sell a variety of assets to make up for the decline in iron ore's value.

China had long been one of the biggest producers of steel in the world as it upgraded its infrastructure and looked to build its way out of the 2008 recession, but using iron ore as collateral is not the same as using something like gold or copper. As the Wall Street Journal points out, "China consumes two-thirds of the seaborne iron-ore market, and futures for the mineral are far less liquid than for copper. So participants can't easily hedge their exposure to sudden price moves." Any volatility that we see in the price of iron ore, then, is a phenomenon that the Chinese have brought upon themselves.

So, quick question: How do you say "negative feedback loop" in Mandarin? We might have to learn it. Soon.

Twitter: @japhychron
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No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Chinese Companies May Face Iron Ore Collateral Call
From the Buzz & Banter: Traders may be forced to sell.
Professor Pinch    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

A horse, a horse, my kingdom for a horse!

-- Richard III, William Shakespeare

Those were the words famously yelled out in William Shakespeare's play Richard III. They may be heard again as Chinese traders, who
have been pledging iron ore for collateral, are being forced to sell a variety of assets to make up for the decline in iron ore's value.

China had long been one of the biggest producers of steel in the world as it upgraded its infrastructure and looked to build its way out of the 2008 recession, but using iron ore as collateral is not the same as using something like gold or copper. As the Wall Street Journal points out, "China consumes two-thirds of the seaborne iron-ore market, and futures for the mineral are far less liquid than for copper. So participants can't easily hedge their exposure to sudden price moves." Any volatility that we see in the price of iron ore, then, is a phenomenon that the Chinese have brought upon themselves.

So, quick question: How do you say "negative feedback loop" in Mandarin? We might have to learn it. Soon.

Twitter: @japhychron
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
More From Professor Pinch
Chinese Companies May Face Iron Ore Collateral Call
From the Buzz & Banter: Traders may be forced to sell.
Professor Pinch    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

A horse, a horse, my kingdom for a horse!

-- Richard III, William Shakespeare

Those were the words famously yelled out in William Shakespeare's play Richard III. They may be heard again as Chinese traders, who
have been pledging iron ore for collateral, are being forced to sell a variety of assets to make up for the decline in iron ore's value.

China had long been one of the biggest producers of steel in the world as it upgraded its infrastructure and looked to build its way out of the 2008 recession, but using iron ore as collateral is not the same as using something like gold or copper. As the Wall Street Journal points out, "China consumes two-thirds of the seaborne iron-ore market, and futures for the mineral are far less liquid than for copper. So participants can't easily hedge their exposure to sudden price moves." Any volatility that we see in the price of iron ore, then, is a phenomenon that the Chinese have brought upon themselves.

So, quick question: How do you say "negative feedback loop" in Mandarin? We might have to learn it. Soon.

Twitter: @japhychron
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
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