Iron ore futures in Asia dropped on Monday, as
the Chinese National Development and Reform Commission (NDRC), said that it has
joined with the market regulator to look into the iron ore spot market and has
pledged to crack down on hoarding and speculation.
The move comes after NDRC said on Thursday that new
rules on the management of price indexes for commodities and services
will be effective August 1 and will standardise price index compilation and
transparency of information.
During a visit to the Beijing Iron Ore Trading Center
Corporation (COREX), the NDRC and State Administration for Market Regulation
surveyed iron ore transactions and price changes this year, the state planner
said.
Benchmark iron ore futures on the Dalian Commodity
Exchange plunged as much as 9% to 1,119 yuan ($173.14) per tonne on Monday,
narrowing their gains to 30% so far in 2021.
Benchmark 62% Fe fines imported into Northern China
(CFR Qingdao) were down 4.9%, changing hands for $208.15 a tonne, according to
Fastmarkets MB.
Transactions on iron ore platforms such as COREX,
processed via broker screens, are used by various price index providers for
their price assessments.
Some of these indexes, often published by private
index providers, are then used to settle physical trades of commodities or
to settle a derivative on an exchange.
NDRC also announced on Friday that an investigation has been launched
into coal prices, as China is taking several steps to stamp down commodity
prices.
The regulators on Monday also discussed ensuring
supply and stability of prices of commodities such as iron ore,
according to the statement.
“Iron ore prices have risen significantly and remain
high, putting pressure on production and operation at mid-and downstream
companies,” said the statement, citing a meeting held by the authorities.
China has rolled out a swathe of measures — from
trading curbs to releases from state stockpiles — in a sweeping effort to
stem inflation by cooling runaway commodities. Many of the prices have fallen
from May peaks, with steel, in particular, beating a rapid retreat.
Chinese prices for steel rebar used in construction
are down about 19% from their May peak, but are still far above long-term
averages.
“Intervention can help alleviate the pressure but
it’s hard to change the trend,” Hao Hong, head of research and chief strategist
at Bocom International told Bloomberg.
“Commodity inflation is driven by global demand
growth, rather than by China. China is only a price taker.”
Mining.com