[ad_1]
The price of iron ore for steelmaking fell sharply after China indicated it would focus on efforts to cool rising prices, warning of “excessive speculation” as concerns about rising inflation.
The National Development and Reform Commission, China’s economic planning agency, said Monday it would crack down on monopolies in commodity markets, the dissemination of false information and hoarding.
That message hit markets on Monday, with the main iron ore futures contract falling 7% in China’s Dalian exchange rate to 1,049 Rmb ($ 163) a tonne. Iron ore has lost almost a quarter of its value since it struck a record high earlier this month. The aluminum futures contract for the July delivery fell 3% on the Shanghai Stock Exchange.
The Chinese government’s statement reflects its growing concerns rising prices of raw materials, which have been turbocharged by the country’s industrial recovery from the pandemic. The prospect of a global economic recovery has boosted prices.
“I think there is growing evidence of speculative excess,” said Robert Rennie, head of market strategy at Westpac, who suggested there is likely to be more intervention from Beijing. Stronger-than-expected Chinese demand and returned global demand had been the main driver of prices, he said.
China is by far the world’s largest consumer of commodities and the highest prices of raw materials are achieved at production costs. Factory prices in the country fell 6.8% year-on-year in April after falling for much of 2020.
In a statement following a meeting with China’s major metal producers, the NDRC said price rises were related to factors such as “excessive speculation” and warned companies not to join forces to manipulate the markets.
Last week, state broadcaster CCTV cited a meeting of the state council, chaired by Premier Li Keqiang, which said steps should be taken to prevent commodity price rises from going up in consumer prices. . The comments contributed to the sale of goods on Thursday.
China’s consumer price index has remained low compared to the producer price index, with consumer demand lagging behind the industrial recovery. In April, the CPI rose 0.9% year-on-year.
The Chinese economy reached pre-pandemic growth rates late last year. In 2020, it produced record amounts of steel as part of an industry-driven recovery after the first coronavirus shock, which fueled a construction boom and increased demand for iron ore from Australia.
An attempt to do so they slow down carbon-intensive steel production, part of efforts to achieve new environmental targets, helped raise prices earlier this year based on expectations of supply constraints.
“One of the reasons you may worry about hoarding at the moment. . . the Chinese authorities have basically explained to the industry that they want to reduce the record levels of steel production, ”Rennie said.
[ad_2]
Source link
