BEIJING: China's state planner, the National Development and Reform Commission (NDRC), said on Monday it and the market regulator are jointly looking into the iron ore spot market and have 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 Aug 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 in a statement.
Transactions on iron ore platforms such as Corex, done 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 announced on Friday that an investigation has been launched into coal prices, as China is taking several steps to tamp 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.
The regulators said China would closely monitor spot trading prices and investigate malicious speculation in a timely manner.
They would also “strictly punish and disclose” irregularities such as hyping prices and hoarding, and maintain good market order, said the statement.
Iron ore futures in Asia tumbled on Monday, with losses widening after the Chinese authorities launched an investigation into the spot market as prices of the key steelmaking ingredient remained high despite repeated warnings against hoarding and speculation.
The most-traded September iron ore on China's Dalian Commodity Exchange ended daytime trading 8.8% lower at 1,121 yuan (RM722) a tonne, after earlier hitting 1,118.50 yuan, its weakest since June 8.
The most-active July contract on the Singapore Exchange fell as much as 5.7% to US$195.05 (RM809.36) a tonne, the lowest also since June 8.
Spot prices had held ground above US$200 a tonne over the past three weeks, despite government efforts to rein in commodity inflation partly driven by speculative trades that helped propel iron ore to a record peak above US$230 last month.
Both Dalian and SGX benchmarks, however, were already under pressure when trading began, as sentiment was hit by a seasonal slowdown in construction activity in top steel producer and consumer China.
“It’s safe to say that China’s seasonal slowdown in construction steel demand has now arrived, with rebar inventories at steel mills and warehouses across China both showing firm builds,“ said Atilla Widnell, managing director at Navigate Commodities in Singapore.
Steel futures also fell, with rebar on the Shanghai Futures Exchange down 4.2%. Hot rolled coil fell 4.3%, while stainless steel slipped 0.6%.
Dalian coking coal slid 4.2% and coke shed 5.4%, after seven straight sessions of gains, as the coal market has also come under similar government scrutiny. – Reuters
Source: The Sun Daily
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