On Friday, China cut its five-year loan prime rate from 4.60% to 4.45%. The reduction comes as China seeks to alleviate the adverse impacts seen from Covid-19 and the introduction of the “three red lines”, which has seen the property market experience eight straight months of home-price reduction and several developers come under pressure. In our view, the move is a clear indication that Chinese authorities is seeking to reverse some of the self-imposed constraints on its housing sector, as Bloomberg Economics currently forecasts that China’s growth will trail the US for the first time since 1976 and as the anticipated re-election of President Xi nears.

 
The Chinese government today announced it has implemented several measures to support the economy and will broaden its tax credit rebates, postpone social security payments, and loan repayments, and roll out new investment projects. The report also added that the Chinese Government will try to maintain the economic growth and achieve social and economic targets for 2022. In sum, we find this being supportive for raw-material intensive demand near-term and should continue to aid demand for dry bulk shipping in the coming months as seasonality builds towards October.