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Iron ore prices in China sank on Wednesday after state media reported banks in Beijing had raised interest rates for housing loans.
The futures contract for one tonne of iron ore for September delivery on the Dalian Commodities Exchange dipped as much as 4 per cent to Rmb592 in morning trading, falling to its lowest level this month.
That drop brings the price of iron in China down 11.9 per cent since the September futures’ high of Rmb673 in late February, and marks the steel-making ingredient’s second technical correction (defined as a drop of 10 per cent from a peak) in that period.
On Wednesday state newspaper Beijing Youth Daily reported that 16 banks located in the capital – including Industrial and Commercial Bank of China and China Construction Bank – had raised their baseline interest rate for housing loans 5 basis points to 0.95 per cent.
That followed a report from respected news magazine Caixin on Tuesday revealing the People’s Bank of China had ordered further reining in of home loan growth at the country’s commercial banks.
Iron ore is now on track for a fourth day of losses after Beijing launched another round of purchasing restrictions and lending curbs this month intended to cool the country’s overheated property markets after average home prices rose 11.8 per cent year on year in February.