China Business News reported on Wednesday that the central bank was planning to include interbank lending by non-bank financial institutions as part of the calculated deposit base. Quoting unnamed insider sources who attended a meeting with the central bank, the report said 24 major financial institutions were also told that even if interbank assets are including in the base, they may not need to set aside additional reserves, leaving more liquidity available for lending and investment.
Still, a combination of sluggish demand, along with worries of a worsening supply glut at home and abroad, continued to weigh on iron ore markets. Analysts said Chinese iron ore production would rebound should the government agree to a proposal by the China Iron Ore & Steel Association to cut taxes for local iron ore miners. "The tax cut will help these mines but it will be bearish for prices because producers will immediately pass on the cost savings as they compete for buyers," said a Hangzhou-based analyst at Nanhua Futures. Benchmark 62 percent grade iron ore for immediate delivery to China slightly rose 0.6 percent to $66.20 a tonne on Tuesday, according to data compiled by the Steel Index.