"Iron ore price sinks as China vows to punish market manipulation"

" \n Iron ore\u2019s slump from a record accelerated Friday as China ramps up efforts to control prices. \n \n\n \n Benchmark iron ore futures on the Dalian Commodity Exchange, for September delivery, dived 7.5% to 1,173 yuan ($182.22) a tonne. The contract fell 4.4% this week . \n \n\n \n Spot prices of\u00a0iron\u00a0ore with 62%\u00a0iron\u00a0content for delivery to China, compiled by SteelHome consultancy, had declined $12 to $220.5 a tonne on Thursday. \n \n\n \n China\u2019s cabinet on Wednesday said that government departments would step up coordination on policies to stabilise the economy and accommodate the fast increase in commodity prices, same day iron ore price surged to a record $237.57 per tonne in New York. \n \n\n \n Officials in Tangshan, the heart of China\u2019s steel industry, also warned its steel mills to maintain market order and safeguard companies\u2019 normal operations. \n \n\n \n The local government there said it would look into illegal behaviour including market manipulation, spreading rumours, and hoarding, and would punish and suspend businesses found guilty. \n \n\n \n \u201cSentiment is very volatile, and the Chinese government\u2019s control is very strict,\u201d Wang Yue, an analyst with Shanghai East Asia Futures Co told Bloomberg. \n \n\n \n \u201cFerrous metals have been falling since Premier Li pledged to control the commodities surge earlier this week, which showed the government is very much concerned\u201d about the impact on manufacturers\u2019 profitability, Wang said. \n \n\n \n \n \n\n \n \u201cPrices have already reached a peak level from a medium- and long-term perspective,\u201d Huatai Futures Co. wrote in a note. \n \n\n \n \u201cDemand for iron ore may soften when output restrictions are implemented under the environmental push.\u201d \n \n\n \n Inflation worries \n \n\n \n Steelmakers in China have been ramping up production in defiance of government attempts to rein in output to control the industry\u2019s carbon emissions, with robust profit margins enabling mills to accommodate surging input costs. \n \n\n \n The government has already scheduled nationwide inspections of steel-capacity cuts, reiterated a commitment to reining in production from last year\u2019s record of more than 1 billion tonnes and set targets for peak carbon emissions. \n \n\n \n Authorities had sought to tame a range of markets this week, with Chinese bourses raising trading limits for iron ore and increasing fees for steel and coking coal. The surge across commodities helped push the country\u2019s factory-gate prices up by the most since 2017, and inflation concerns are intensifying around the world amid a broad economic recovery and vast stimulus programs. \n \n\n \n Construction \n \n\n \n Chinese builders have slowed purchases of steel-based materials after prices soared to record highs, but the top steel-consuming construction sector is expected to remain well supported until the rainy season slows activity from June, trade sources told Reuters. \n \n\n \n The most-traded contracts for construction-grade steel rebar and wire rod on the Shanghai Futures Exchange have surged close to 40% this year, and over 20% since April 1, amid a stimulus-driven building boom that has helped lift the Chinese economy since late 2020. \n \n\n \n A Guangdong-based construction firm, which normally replenishes steel product stocks every week, said the company was now buying only 5% of its usual volumes after prices soared. \n \n\n \n \u201cWe have suspended whatever projects we can suspend,\u201d a contact from the company said. \n \n\n \n Another builder in eastern Zhejiang province also slowed purchases and is \u201conly buying materials as needed\u201d as it tracks the overheated market. \n \n\n \n \u201cThese steel prices are beyond the market\u2019s acceptance,\u201d Zhuo Guiqiu, analyst with Jinrui Capital said, noting that some manufacturers also stopped taking new orders. \n \n\n \n Spring is typically the peak season for construction in China as builders return to work after the Lunar New Year holidays and work quickly ahead of the rainy season from June. \n "

"Iron ore price sinks as China vows to punish market manipulation"

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