Iron Ore Prices Still Falling With Crackdowns from China

The Sydney Morning Herald reported today that despite April’s announcement of a railway construction stimulus project by China, iron ore prices have fallen 19.3 percent since the beginning of the year. The fall comes on expectations that bank regulators in China will start to tighten and enforce rules surrounding the use of iron ore as collateral in financing deals, according to the Herald.

Financial stability in China is at risk, Mr Lele said while releasing Deltec’s quarterly outlook report, due to the level of leverage across the entire economy, especially with commodities such as iron ore being used as collateral. China’s banking regulator is expected to crack down on these financing deals by increasing the required deposit amount on credit deals with iron ore used as collateral.

Click here to read the full Sydney Morning Herald article.