Recyclers are reporting that caution within the Chinese lending industry is affecting access to credit and payment terms for scrap shipments to China.
According to a report from Bloomberg.com, the China Banking Regulatory Commission has been curbing certain types of real estate loans and also urging banks to scrutinize lending through certain financing vehicles that provide capital in a wider range of transaction types.
Cutting down on speculative real estate activity and controlling inflation appear to be the objectives, but an export broker tells Recycling Today that the caution has spread to the overall lending atmosphere in China. “The situation is causing cash flow problems and access to credit facilities is a problem,” says the broker.
A nonferrous metals processor in the United States says the situation may be why he has been hearing from smaller scrap dealers who often sell their material directly to export destinations. “It started in the past two or three months—the buying from East Asia became much more inconsistent,” he comments.
China Banking Regulatory Commission head Liu Mingkang is quoted by Bloomberg.com as saying that lenders must “effectively” control their lending growth and set an easier pace for the flow of credit to avoid conditions such as property prices rising by 11.7 percent in one month, as they did on average in 70 Chinese cities in March 2010.
According to a statement from Liu, China’s central bank has as its goal to reduce new loan volume by 22 percent in 2010 after a record $1.4 trillion of credit was dispensed in 2009.