Spot prices are way down for iron ore and nickel (which goes into iron ore production).

China has increased its iron ore imports over the past few weeks. And, as you can see from the chart below, nickel prices began rebounding at the end of last year.

The $586 billion construction stimulus program in China could be behind these recent trends.

But my Chinese sources say there’s a more mundane (and less hopeful) explanation. They say that China is buying more iron ore to take advantage of current low prices and build up inventories.

China’s economic growth is around 6.5-6.6 percent. It was 11-12 percent before it got caught up in the global economic slowdown. China has a long way to go to get economic growth anywhere near normal.

But I still think the first countries to rebound will come from the east and not from the west. It just won’t be soon.

Source: Basic Metals Not Ready for Primetime