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| Nanhua news |
| Steel futures fall on CBRC warns of credit risks in steel enterprises - 27 Jan, 2010 |
| 2010-01-27 16:08:19 |
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It is reported that China Central Bank published to lift up the commercial banks' reserve fund rate.
On January 20th dominant contract for RB 1005 fell after it opened high under the report that China Banking Regulatory commission issued a document warning the banks of credit risks in steel industry and asked banks to get a clear picture of steel enterprises' operation.
Domestic steel market will be seriously pressed under the tightening credit as traders will rush to dump stocks against the backgrounds. Though the tightening credit will cast negative effects on steel industry more slowly, it will be a disaster for some trading companies with swelling stockpiles. Traders' dumping goods will inevitably lead to quickly dropping price.
Once traders were impacted, steel makers would immediately feel great pressure caused by the rapidly increasing stocks. Therefore, the only sensible course for steel makers is to cut production.
Actually, the continuously rising stocks really arouse high attention from the insiders. And the stocks are expected to keep on going up during the upcoming Spring Festival. |
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