• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Fat Tail Daily

Investment Ideas From the Edge of the Bell Curve

  • Menu
    • Commodities
      • Resources and Mining
      • Copper
      • Gold
      • Iron Ore
      • Lithium
      • Silver
      • Graphite
      • Rare Earths
    • Technology
      • AI
      • Bitcoin
      • Cryptocurrency
      • Energy
      • Financial Technology
      • Bio Technology
    • Market Analysis
      • Latest ASX News
      • Dividend Shares
      • ETFs
      • Stocks and Bonds
    • Macro
      • Australian Economy
      • Central Banks
      • World Markets
    • Small Caps
    • More
      • Investment Guides
      • Premium Research
      • Editors
      • About
      • Contact Us
  • Latest
  • Fat Tail Series
  • About Us
Commodities

Ready, Set, Fire! Gearing Up for China Stimulus

Like 5

By James Cooper, Monday, 10 March 2025

Former geologist James Cooper highlights the hidden opportunity within the iron ore market. While stocks sit at multi-year lows, China’s iron ore imports have never been so high! Investors should seize this opportunity.

Do you remember China’s ‘bazooka’ moment last year?

That’s what the market dubbed China’s hard-hitting stimulus package.

It caused resource stocks to tear after their mid-year meltdown over Chinese deflation concerns.

So, here we are again, as this Reuters article details:

‘China ramps up stimulus to guard economy from changes unseen in a century.’

China promised more fiscal stimulus last week and a commitment to meet its 5% growth target.

So, will this re-ignite Australia’s iron ore sector?

Mining Memo’s Take

It’s important to understand that China has a fixed long-term plan to hit a 5% GDP growth target. Moving whatever levers necessary to make that happen.

But what about the country’s slowing real estate market?

Won’t this kill demand for steel and the outlook for iron ore producers?

When investors think of the demand for iron ore, they instantly link it to the Chinese real estate market and new building constructions.

But that’s a misconception left over from the last mining boom. Things are much different in today’s steel market.

In 2010, at the peak of the last commodity boom, building construction accounted for around half of Chinese steel demand.

Today, that’s fallen to just 24%.

Machinery construction is now the biggest driver of steel demand in China…that includes equipment for agriculture, mining, car parts and tools.

You can see the changing dynamic in the graphic below:

Fat Tail Investment Research

Source: BHP

China’s demand for steel is far more diverse than it was back in the early 2000s commodity boom and that potentially makes today’s market more resilient.

Another point lost on most investors is the fact that China is importing more iron (today) than at any point during the early 2000s resource boom!

As this article from Reuters shows, in the second half of 2024, iron ore imports hit a record high.

That speaks to the ‘quiet’ boom happening across machinery construction.

But you wouldn’t know that from the price action of Australia’s iron ore miners or from the poor sentiment towards these stocks.

That’s why I suggested you look at a major like Fortescue Metals [ASX:FMG], in last week’s edition of the Mining Memo.

A stock that’s been under enormous pressure over the last 12 months but perhaps positioned for a surprise recovery in 2025.

But what about the other elephant
in the room, Simandou?

If you’re unaware, Rio Tinto and its partners want to import additional iron ore from Guinea, a small country in West Africa.

It’s generally considered a threat to Australia’s monopoly in the iron ore market… Dubbed the ‘Pilbara Killer.’

But again, Simandou’s fears look overblown.

Consider this: In 2024, Australia mined and exported around 900 million tonnes of iron ore, mainly from WA’s Pilbara region.

Meanwhile, Simandou spruiked as the NEW iron ore epicentre, is expected to deliver a mere 60 million tonnes.

That equates to around 6.5% of Australia’s market share.

But you also need to factor in declining output across some Australian and Brazilian mines which will take supply off the market.

It highlights another misconception in the iron ore market…Simandou is not about to overrun the market with new supply. More likely, it will just replace declining reserves at established operations.

FMG offers one avenue to play this potential turnaround in iron ore stocks.

But if you’re looking for a more speculative opportunity, I recently recommended a small ASX miner to my paid readership group.

A company that’s positioned to rapidly grow its iron ore division this year.

Why does that matter?

Well, to leverage gains from higher commodity prices, you need to be in stocks that are ramping up production.

If everything goes to plan, that’s precisely what this company should achieve in 2025.

If you’d like to find out more, you can do so here, by joining me at Diggers & Drillers.

Enjoy!

Regards,

James Cooper Signature

James Cooper,
Editor, Mining: Phase One and Diggers and Drillers

All advice is general advice and has not taken into account your personal circumstances.

Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

Comments

Subscribe
Notify of
guest
guest
2 Comments
Inline Feedbacks
View all comments
James Cooper

James Cooper has been a working geologist in mines across Australia, Canada, and Africa since the early 2000s. He’s led the operations of tiny explorers through to huge producer outfits. He’s seen booms and busts firsthand and he also understands the cyclical nature of individual commodities. For example, James was right there when Barrick Gold launched an enormous $7.5 billion takeover bid for Equinox. That was the peak of the last cycle.

With his background as a geo and finance professional, he brings a unique insight and experience to Fat Tail Investment Research. He writes the broader resource-focused investing letter Diggers and Drillers and the ultra-speculative explorer-focused trading service Mining: Phase One.

James’s Premium Subscriptions

Publication logo
Diggers and Drillers
Publication logo
Mining: Phase One

Latest Articles

  • The next wave of AI winners
    By Callum Newman

    Hedge fund Coatue is putting their stake in the ground. They say AI is going to improve productivity and take down the US debt to GDP ratio. They think the Mag 7 will keep growing. But the next wave of big capital growth will come from different AI winners. The next wave of this tech is via AI “agents”. This could be big if we tee off similar tech breakout points…

  • Could the US People Repudiate the National Debt?
    By Brian Chu

    Could you imagine our financial system doing away with the massive debt load? Seems impossible, right? But there are signs suggesting this could happen in the future.

  • Trump to juice the AI supercycle even more
    By Callum Newman

    Today we’ll speculate that a new class of AI winners is going to emerge, in a thousand different ways. That’s not to say you can’t make money in the classic plays like Nvidia or Tesla. But Coatue have other ideas, which they float here…

Primary Sidebar

Latest Articles

  • The next wave of AI winners
  • Could the US People Repudiate the National Debt?
  • Trump to juice the AI supercycle even more
  • Copper: on the precipice of a historical breakout
  • How the “AI Flywheel” can save the global economy

Footer

Fat Tail Daily Logo
YouTube
Facebook
x (formally twitter)
LinkedIn

About

Investment ideas from the edge of the bell curve.

Go beyond conventional investing strategies with unique ideas and actionable opportunities. Our expert editors deliver conviction-led insights to guide your financial journey.

Quick Links

Subscribe

About

FAQ

Terms and Conditions

Financial Services Guide

Privacy Policy

Get in Touch

Contact Us

Email: support@fattail.com.au

Phone: 1300 667 481

All advice is general in nature and has not taken into account your personal circumstances. Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

The value of any investment and the income derived from it can go down as well as up. Never invest more than you can afford to lose and keep in mind the ultimate risk is that you can lose whatever you’ve invested. While useful for detecting patterns, the past is not a guide to future performance. Some figures contained in our reports are forecasts and may not be a reliable indicator of future results. Any actual or potential gains in these reports may not include taxes, brokerage commissions, or associated fees.

Fat Tail Logo

Fat Tail Daily is brought to you by the team at Fat Tail Investment Research

Copyright © 2025 Fat Tail Daily | ACN: 117 765 009 / ABN: 33 117 765 009 / ASFL: 323 988