Posted on 18 Feb 2022
Iron ore futures contracts on the Dalian Commodity Exchange (DCE) in North China dropped further on Thursday as bearish market sentiment prevailed in response to the National Development and Reform Commission (NDRC) holding another meeting with iron ore traders the same day.
On Thursday, the DCE's most-traded May 2022 ore contract finally closed the daytime session at Yuan 684.5/dmt ($108/dmt), down for the fourth straight trading day by another Yuan 27/dmt or 3.8% from Wednesday's settlement price.
In a statement released by the NDRC on its official Wechat platform late Thursday afternoon, it said that a joint team from the Commission and the State Administration for Market Regulation (SAMR) was dispatched to conduct a "supervision" survey in Qingdao - North China's largest iron ore port - to determine iron ore inventory levels at the port and obtain the list of companies with fast-growing ore stocks.
The team also held a meeting with some iron ore trading companies in Qingdao on Thursday, asking them to draw down their iron ore stocks to reasonable levels as soon as possible. The NDRC-SAMR delegation also instructed the trading houses to provide their recent data involving iron ore stocks including precisely when they bought and sold ore, the quantity involved and the prices paid. The government team was checking to see whether the deals involved any "irregular and illegal" operations such as hoarding and price gouging, the NDRC statement said.
For the time being, the two government bodies are closely watching iron ore price trends, pledging to take "effective" measures to safeguard 'normal' market order and stabilize iron ore prices. Supervision of the market has also been strengthened, according to NDRC.
The latest meeting was among a series of steps taken by China's central government to slow the previous rally in iron ore prices, Mysteel Global notes.
Just two days earlier, on Tuesday, NDRC and SAMR had held a meeting with another group of iron ore trading companies to gauge their iron ore port stocks and the status of trading operations in both the physical and futures markets, as reported.
Also on Tuesday, the China Iron and Steel Association (CISA) had held a video meeting with Rio Tinto, the largest Australian iron ore miner, to discuss the status of Rio's production and sales and recent trends in the global iron ore market.
During the meeting, CISA mentioned that violent fluctuations in ore prices are not good for the industrial chain and do not serve the long-term interests of all parties, CISA said in a post, adding that the association hoped Rio would ensure that long-term contracts are honoured, as reported. Rio Tinto also agreed that iron ore prices must be in line with the real demand and supply.
On Tuesday, the most-traded May 2022 rebar contract on the Shanghai Futures Exchange also dipped further by Yuan 94/tonne or 2% from Wednesday's settlement price to close the daytime session at Yuan 4,686/t.
Source:Mysteel Global
