By Paul Ploumis 27 Aug 2015  Last updated at 04:15:05 GMT

The People's Bank of China's injection of Yuan 140 billion ($21.9 billion) into the inter-bank market Wednesday on top of cutting lending interest rates and reserve ratio requirements deepened fears among steel and iron ore market participants about the fragile state of the country's economy.

London (Platts): The People's Bank of China's injection of Yuan 140 billion ($21.9 billion) into the inter-bank market Wednesday on top of cutting lending interest rates and reserve ratio requirements deepened fears among steel and iron ore market participants about the fragile state of the country's economy.

"We are all worried about the Chinese economy...In fact, with the government pushing out so many pro-growth policies in a matter of days, I think we can only expect more anxiety over the expectations of how the economy is going to perform," a Hebei-based steelmaker said.

Another steelmaker in the Anhui region said: "These few days the Chinese stock markets have been plunging, a telling sign of how badly the economy is doing. With the government doing so much to try to lift the economy, we are even more certain in knowing the country's economic health isn't faring well."

"I am leaning toward the pessimistic side in my expectations going forward with regard to China's economic and manufacturing performance," the steelmaker added.

On top of the Yuan 140 billion injection, the PBoC cut its lending interest rate by 25 basis points to 4.6%, and also lowered the cash reserve ratio required of banks in the country, pushing the one-year deposit rate down 25 basis points to 1.75%, in a move made effective Wednesday.

This will give banks more liquidity to make loans.

These stimulus policies follow a slump in Chinese equity markets this week. The Shanghai Composite Index continued to decline Wednesday, albeit by a smaller extent than earlier in the week, losing 1.27% on the day to 2,927.288.

The SHCOMP tumbled 7.6% Tuesday after having already dropped 8.5% Monday.

Industry sources said they were unlikely to benefit immediately from the new stimulus policies.

The steelmaker in Hebei said the measures were "geared toward helping the equity markets recover, and not toward helping manufacturing", so it was unlikely that steel and iron ore players would receive more aid.

"Banks are not inclined to extend new loans with more attractive interest rates to these lossmaking industries," the steelmaker added.

"The rate cuts are going to take some time to flow down to the manufacturing industries. It is not immediate," a source at a Zhejiang-based mill said. "We aren't getting any new loans from our bank, so there is no impact for now on improving our ability to buy seaborne iron ore."

Courtesy : Platts