Iron ore price rises as China cuts lending benchmarks
The iron ore price rose on Tuesday after China cut benchmark lending rates and lowered the mortgage reference by a bigger margin in a move to support its property market.
According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $102.18 a tonne Tuesday morning, up 1.8%.
China’s property market crisis is testing whether central bank Governor Yi Gang can stick to his stimulus-lite strategy.
Over the past couple of weeks, Yi has cut key lending rates, announced special loans to struggling property developers via policy banks, and urged state-owned lenders to extend more credit. Meantime, speculation of a cut to reserve requirement ratios grows.
China’s real-estate slump, however, shows little sign of improvement.
Li Daokui, a former adviser to the People’s Bank of China and currently a professor at Tsinghua University in Beijing, says more stimulus will be needed if covid and the restrictions to contain its spread continue to weigh on the economy.
“Right now, monetary policy should do everything possible to avoid the financing chain in the housing market from breaking,” he said.
