Iron ore prices have plunged under $100 per ton (its worst week ever) as anxiety over China's Lehman moment: the collapse of Evergrande, a Chinese real estate company with $300 billion of debt, is weighing on some base metal prices. 

Iron ore futures on the Singapore Exchange plummeted 21% this week as the Evergrande meltdown has hurt China's residential property market outlook. Evergrande's 2023 bonds overlaid on iron ore futures suggest metal traders are concerned the massive real estate company might fold, and the stoppage of new residential buildings could hamper future demand. 

Beijing has also pushed to reign in the country's massive steel industry by forcibly shutting down smelters to reduce carbon emissions ahead of next year's Winter Olympics. 

This week's slump makes iron ore the worst-performing major commodities and an outlier as aluminum soars to a 13-year high, coal futures surge, natural gas prices are on a tear, and power prices are off the charts in some parts of the world. 

Iron ore prices slumping below $100 is a sign of relief for steel producers but inversely impact the world's top miners, many of whom are based in Australia, have handsomely reaped the profits of the key steel-making ingredient, more than doubling in price since the pandemic low of around $80. 

If Evergrande is "too big to fail," then one would suspect a government bailout to ensure the property market doesn't stumble is imminent, which would help stabilize the metals market. 

New data from the People’s Bank of China shows Beijing has blinked. On Friday, the central bank added $14 billion in liquidity injections, the most significant one-day injection since February. It suggests the one-time liquidity boost could be tied to measures to prevent a system-wide unraveling as Evergrande faces insolvency. 

The one thing Beijing cannot let happen is to allow depression in the second-largest economy. As the country's credit impulse has bottomed, a new wave of credit creation could be ahead to save it from financial turmoil.