From Reuters:
Chinese iron ore futures dived nearly 5 percent on Monday as investors are worried that domestic banks could further cut credit lines to the sector to minimize default risks amid a slowing economy.
Chinese banks have cut loans to the capital-intensive steel industry including iron ore traders due to concerns over their inability to repay loans, particularly since the slowing economy hit demand growth for metals this year.
“The market is all talking this morning about the banking regulator telling banks to check iron ore financing to stem default risks, though it seems no one can confirm this is a new measure or not,” said Ding Rui, an analyst with Zhongcai Futures in Shanghai.
“The credit crunch facing the steel sector has been going on a long time, and this will not be improved in the near future, but I still think investors are a bit over-reacted.”
Reuters was not able to confirm any official notice from the China Banking Regulatory Commission of the cut in credit.
FXStreet is also reporting that:
PBOC’S Pan crossed the wires earlier today saying that they will intensify the crack down on illegal fund raising practices by some entities in China.
That means the cash for commodity scams. This is what has derailed the ASX this afternoon as the big miners follow futures down.
