The decision by the People’s Bank of China to cut the reserve requirement ratio by 0.5 percentage points has driven up sentiment in the Chinese steel and iron ore markets. The Chinese government also signaled that the real estate market will be stabilized, and iron ore prices rose by roughly 8.66% yesterday.

By cutting the reserve requirement ratio to 8.4%, some RMB1.2trn or ($181bn) will be released, allowing banks to fund projects more easily in the battered property sector as well as in infrastructure projects. Coming in as the highest since July last year, iron ore imports rose to almost 105.0 MMT last month, versus about 91.6 MMT in October. Iron ore prices for 62% Fe fines rose by $8.51 per tonne to $111.3 per tonne on a CFR-basis in Qingdao, according to Fastmarkets.

The race is on, as demand from China is visibly picking up, in what Lorentzen & Stemoco believes is a fundamental turning point. Yesterday, the Baltic Exchange reported the 5TC up by $2354/day to $41,324/day and noted that the Anglo-Australian mining company Rio Tinto took three capesize bulkers for voyages out of Dampier to Qingdao on its 170,000 tons iron ore +/- 10% stem. Rates were done at $14 and $ low 14s per ton. The Norwegian brokerage reported the market is riding higher particularly on the C5 between West Australia to Qingdao, but the Atlantic is about to strengthen in a market looking stronger. Yesterday, the Baltic Exchange posted the 5TC at $38,970 a day, up by $874 day.