For the second time in less than a year, China's central bank - the People's Bank of China (PBC) - has moved to moderate the country's shadow banking sector by limiting lending to banks, leading to higher borrowing rates.
A similar effort was made in June of last year, which resulted in a sudden increase in demand for copper, as cash-strapped borrowers were able to get lower interest rates on USD loans financed using copper as credit.
This time, however, the PBC's effort to tighten liquidity was strategically coordinated with a significant depreciation in the RMB - USD exchange rate, the currency's largest depreciation against the dollar since becoming de-pegged in 2005. The depreciation was an effort to deter speculators who profited from the spike in interest rates last June.
With all this monetary action in the world's largest metals economy, SM Report has finally come back from a longer-than-planned break to look at the effects that these developments are having on the market for minor and strategic metals.