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2022-09-30
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China plans to strictly control the import financing of iron ore

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China plans to strictly control the import financing of iron ore

Dai rujun, general manager of Heilongjiang Xinda enterprise group, said at the signing ceremony: "Xinda has unique technical barriers in the field of biological assets and biological matrix composites

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core tip: China plans to tighten the management of iron ore import loans, because some steel enterprises ignore the national policy of reducing the production capacity of industries with serious pollution and losses, and use import loans to maintain operations. Recently, the concerns caused by this practice are deepening.

China plans to strictly control the financing of iron ore import

China plans to tighten the management of iron ore import loans, because some steel companies are using import loans to maintain operations in disregard of the national policy of reducing production capacity in industries with serious pollution and losses. This practice is causing growing concerns

the China Banking Regulatory Commission issued a document warning banks to tighten controls on iron ore import letters of credit, resulting in a 5% decline in the iron ore futures price in the Chinese market on the 29th

at the end of February this year, the industry's rush to destock led to a sharp fall in iron ore prices. For at least two months, there has been a rumor in China that stricter measures will be introduced after the May Day Labor Day. It is said that the margin of letter of credit for iron ore trade will be significantly increased after the May Day holiday. It is reported that the margin ratio will rise from the current 15% to 30%

as other credit channels are drying up, iron and steel enterprises and traders have begun to use extruded polystyrene board, which is also a material that integrates waterproof and thermal insulation, to import iron ore into capital, which has also become another off balance sheet or shadow financing channel. Part of the attraction of this approach is that steel companies can benefit from lower international interest rates than domestic interest rates

under the capital control aimed at preventing the real estate industry from obtaining speculative funds for many years, Chinese enterprises have developed many creative financing channels. However, the transportation of iron ore is large and difficult. It is not a convenient financing goods, and its flexibility as a financing tool is not as flexible as copper or gold

regulators worry that the collapse of a heavily indebted steel enterprise may endanger a large number of local bank branches and even local governments, because steel enterprises are usually the largest employers, taxpayers and debtors in the region. Haixin iron and Steel Group, which is being rescued by a local government in Shanxi Province, is a convincing example

data on Friday showed that the total stock of iron ore in Chinese ports is 109.55 million tons, an absolute record high, but still at a low level compared with the import demand of the steel industry

according to the data of the first quarter of this year, China's steel production will reach 822 million tons this year, with a year-on-year increase of 5.5%, although the debt level will rise, the financing cost will increase, and environmental regulations may become more stringent

Zhang Changfu, vice president of CISA, lamented that the production capacity is still expanding, which will further squeeze the industry profits

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