Iron ore price, page-9210

Some big positives to come from the below article:

- potential VAT cut of 2-3%
- special bond issuance for govt infrastructure projects to increase from 1.35trillion to 2.2trillion this year.


https://www.argusmedia.com/en/news/...tment-growth-to-accelerate?backToResults=true


China’s infrastructure investment growth to accelerate
Published date: 16 January 2019

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China's infrastructure investment growth could accelerate to 7.5pc on the year in 2019, said investment bank Morgan Stanley, after Beijing announced yesterday that the amount of special bonds issuance to provincial governments for construction of major infrastructure projects will be sharply increased.

Infrastructure investment growth slumped to 3.7pc in January-November 2018 from 19pc in 2017, said the national bureau of statistics, although Morgan Stanley estimates real estate investment growth for 2018 at 1.5pc.

Beijing had announced a 1.35 trillion yuan ($199.54 billion) special bond issuance for provincial governments' infrastructure projects in 2018, disbursal for which is scheduled to be completed by September 2019. Morgan Stanley estimates this year's special bonds issuance could be around Yn2.2 trillion.

Beijing has also pledged to reduce project approval times by half and approve central-level project investments by March, said Morgan Stanley.

Seaborne iron ore prices have increased by over 10pc since December as mills and traders have booked more cargoes for February and March deliveries, betting on the stimulus spending to boost demand for steel as construction activities return to normal in spring. Higher infrastructure investment is expected to partially offset a widely anticipated slowdown in real estate growth this year. Property investments grew by around 10pc in January-November 2018, while new project starts have grown at an even higher rate. But concerns on slower real estate growth have led to a sharp fall in steel prices and profit margins since November.

The construction sector, including steel and real estate, accounts for more than 60pc of domestic steel consumption in China.

Unlike iron ore, steel markets have remained immune to the stimulus, with traders sharply reducing cargo stocks for the post-winter months compared with last year. Most traders still hold a pessimistic outlook for steel markets in the spring months.

Beijing also signalled its intention to make more cuts in mandatory cash holdings for banks this year to boost liquidity in the economy, similar to the 100 basis points cut earlier this month. Morgan Stanley expects another 300 basis points cut in cash holding requirements this year.

Ferrous market participants are keenly awaiting a reduction in the value-added tax, currently at 16pc, which Morgan Stanley estimates may be reduced by up to 2-3 percentage points. The VAT cut may be announced in March when the national assembly of lawmakers meets in Beijing for its annual session.

Beijing has also not ruled out an interest rate cut this year, which may provide strong support to ferrous markets by reducing the cost of mortgage.