Iron ore’s brutal decline that saw it tumble nearly 15% last week has been halted, after reports emerged that China’s government has stepped in to resolve the wave of homebuyers’ defaults that sent shockwaves across the economy. Reports that authorities are weighing in and guiding banks to ease credit flows to property developers saw prices of the steel-making material rise as much as 3.8% on Monday. The rally comes after mortgage defaults hit demand prospects for steel last week, bringing iron ore prices below $100 a ton for the first time in seven months.
The China Banking and Insurance Regulatory Commission (CBIRC) told the official industry newspaper on Sunday that banks should meet developers’ financing needs where reasonable.
At least three construction projects across China have restarted or will resume building operations, according to a local media report, with authorities stepping in to work with developers to ease funding flows. Moreover, 10 banks confirmed that delayed payments made up only a small amount of overall mortgages, it said.
Iron ore futures in Singapore were up 2.5% to $98.85 by 9:48 a.m. local time. Futures in Dalian climbed 3.3%, after a 15% weekly loss, while steel contracts in Shanghai surged more than 4%.
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