China's PPI eases for the first time in seven months in March on tumbling iron ore and coal prices

China's producer price index (PPI) eased to 7.6 percent year-on-year in March from 7.8 percent in the previous month. Economists had forecast the annual rate to slow to 7.5 percent. China's producer price inflation cooled for the first time in seven months in March as iron ore and coal prices tumbled, data from the National Bureau of Statistics showed Wednesday.

On a month-on-month basis, the PPI rose just 0.3 percent, the smallest increase since September 2016 and half the pace seen in February. Iron ore and coal prices are likely pressured by fears that Chinese steel production is outweighing demand and threatening a glut of the metal later this year.

The steel industry has been a major driver for the Chinese economy in recent quarters, helping generate the strongest profit growth in years and adding to a reflationary pulse across the global manufacturing sector. Trump administration has said that Beijing's support for such industries has led to over-production and a flood of exports that have distorted global markets, adding to pressure.

"Still, while China's producer price inflation has likely passed its peak, it is likely to remain high for a bit longer, keeping profits at a reasonable level," ANZ said in a note.

"That should give China's central bank confidence to continue with gradual monetary policy tightening as it tries to coax companies to reduce high levels of debt," adds ANZ.