Posted on 16 Feb 2022
Most listed iron ore futures contracts on the Dalian Commodity Exchange (DCE) in North China hit limit down in daytime trading on Tuesday as bearish market sentiment caused by Beijing's latest attack on ore prices prevailed. On Tuesday when the daytime trading session closed, the most-traded May 2022 contract had finally declined to Yuan 699/dmt ($110/dmt), nearly a one-month low, or down by Yuan 77.5/dmt or 10% from Monday's settlement price.
"Market participants, especially speculators, are quite sensitive to any news about central government moves to crack down on what Beijing sees as unreasonable iron ore price movements," a Zhejiang-based iron ore trader in East China commented.
"For example, the news about this afternoon's meeting organized by the National Development and Reform Commission (NDRC) among some iron ore trading companies quickly turned the market sentiment more bearish," he noted on Tuesday, confirming that the meeting had taken place because his company had also attended.
According to the latest statement released by the the State Administration for Market Regulation (SAMR) on its official Wechat platform later in the afternoon, the meeting in Beijing had been jointly organized by NDRC, SAMR and China Securities Regulatory Commission, and was convened to determine iron ore port inventories currently held by iron ore trading enterprises and the status of trading operations in both the physical and futures markets. The government side also warned the traders present not fabricate or publish any false price information, do not undertake "malicious" speculation, or to hoard materials or gouge prices, the release said.
The statement also mentioned that state-owned companies should assume their responsibilities to help the government stabilize ore supply and prices, adding that the related government bodies were closely watching iron ore price trends.
In fact, the NDRC has been active since last week in taking steps to calm the previous rally in iron ore prices.
On February 9, NDRC and the State Administration for Market Regulation (SAMR) held discussions with related iron ore price information providers, reminding them to ensure the accuracy of their releases assessing iron ore prices, and warning them not fabricate or publish any false price information that might contribute to hiking prices, as reported.
A few days later on February 11, NDRC announced that together with the SAMR, it planned to dispatch teams to jointly conduct market supervision surveys among related commodity exchanges and major iron ore ports across the country, with the focus involving identifying the recent situation of iron ore stocks and related enterprises' iron ore trading in both the physical and futures markets, as reported.
"For the time being, it's difficult to say how low iron ore prices will go in response to the great pressure being applied by the central government," the trader remarked. "But the market now seems have a sense that iron ore prices might struggle to rally too high in the future," he added.
On Tuesday, the most-traded May 2022 rebar contract on the Shanghai Futures Exchange also dipped further by Yuan 134/tonne or 2.8% from Monday's settlement price to close the daytime session at Yuan 4,728/t.
Source:Mysteel Global
