fair value for AGO, page-180

Some news from AFR regarding iron Ore demand from China

China's growth plan expected to shore up demand for iron ore
China will use infrastructure spending, private sector investment and business tax cuts to keep the economy growing around 6.5 per cent "or higher" this year as Premier Li Keqiang stressed in a keynote speech that stability was the government's "overriding" priority ahead of November's leadership reshuffle.
In his work report to the country's annual session of parliament on Sunday, Mr Li slightly downgraded the country's growth and money supply targets, signalling the government would do more to tackle problems such as high debt levels and industrial overcapacity.
At the same time, the government will maintain a high level of infrastructure spending to offset the slowdown in housing construction, a move that is expected to shore up demand for commodities like iron ore.
Mr Li said the government's focus would be on boosting consumption, shutting down idle steel mills and coal mines, cleaning up the environment to "make our skies blue again" and allowing more room for the private sector and foreign companies.

While last year's speech triggered a rally in commodities after Beijing signalled economic development was still its "central task," Mr Li indicated the focus this year was on a smooth run-up to the 19th Party Congress, at which five of the country's seven top leaders will be replaced.

"Stability is of overriding importance," said Mr Li. "We should ensure stable growth, maintain employment, and prevent risks."
The country's growth target was downgraded to "around 6.5 per cent" from a target of 6.5 per cent to 7 per cent last year, while its money supply target was reduced to 12 per cent from 13 per cent.
China plans to cut steel production capacity by around 50 million tonnes and shut down at least 150 million tonnes of coal production facilities. Both capacity cuts were in line with expectations although for coal the target was significantly smaller than last year's 290 million tonne reduction.
Mr Li said the government would lower taxes and administrative fees for businesses by about 550 billion yuan ($105 billion) and boost consumption of services by encouraging more private sector involvement in healthcare, education and aged care.

While he didn't mention new US President Donald Trump, Mr Li appeared to reference uncertainty about American economic policy as a key challenge for China this year. During the election campaign, Mr Trump threatened to impose sweeping tariffs on Chinese imports in a bid to protect American factories and jobs.
"World economic growth remains sluggish, and both the de-globalisation trend and protectionism are growing," Mr Li told parliament. "There are many uncertainties about the direction of the major economies' policies and their spill-over effects, and the factors that could cause instability and uncertainty are visibly increasing."
He suggested China would "oppose protectionism" and "become more involved in global governance."


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