COLUMN-China stimulus isn't enough to boost iron ore anymore: Russell
-Clyde Russell is a Reuters columnist. The views expressed are his own.-
By Clyde Russell
LAUNCESTON, Australia, April 2 (Reuters) - China takes steps to stimulate its vast housing sector and the manufacturing index surprises on the upside, and yet iron ore slips to another record low.
It used to be part of the conventional wisdom that the provision of stimulus by the authorities or signs of growth in the factory sector would boost demand for iron ore, and hence lift prices.
But the nexus between the stimulus/growth story and iron ore prices appears to have broken down completely.
The People's Bank of China on March 30 cut downpayment requirements for buyers of second homes, while the Ministry of Finance said individuals selling an ordinary house were exempt from business taxes if they had owned it for more than two years. Sellers were previously exempted from taxes only if they owned the houses for at least five years.
The policy sweeteners, viewed as more generous than the market had expected, are aimed at reviving the country's flagging property sector, which accounts for about 40 percent of the nation's steel demand.
The official Purchasing Managers' Index (PMI) edged up to 50.1 in March, from February's 49.9 and above the media forecast of 49.7 predicted in a Reuters poll of analysts. Continuación...