Friday, China’s Tangshan City Market Supervision Administration, Development and Reform Commission, Industry and Information Technology Bureau, on the price of steel joint interviews with steel producers.
According to the Tangshan Municipal Market Supervision Administration website on May 14, the Tangshan government said it will severely investigate and deal with steel producers colluding with each other, manipulating market prices, hoarding, price gouging and other illegal acts; in serious cases, it will be ordered to suspend business rectification, or revoke the business license.
Friday (May 14) midday, China’s commodity futures fell, black futures set off a tide of losses, iron ore, Zheng coal, wire rod, hot coils, threads fell, power coal fell nearly 8%, coke fell more than 6%.
This year, China’s domestic commodity futures continue to move higher, rebar, iron ore, hot coils, wire rod, coking coal, glass futures main contract prices previously all hit a record high.
Statistics show that since this year, there have been 20 varieties of futures rose more than 20%, of which 10 varieties rose more than 30%, respectively, styrene, glass, hot coils, rebar, iron ore, power coal, crude oil, PVC and Shanghai aluminum.
Market analysis suggests that there are both supply and demand implications behind the high iron ore prices. On the one hand, demand for steel surged as several global economies revoked the blockade triggered by last year’s communist virus epidemic and the economy headed for recovery; on the other hand, global mining giants were plagued by operational problems and iron ore supply was restricted.
The rapid rise in commodity prices has not only raised concerns about soaring global inflation, but also squeezed the profit margins of Chinese producers.
Data released by the National Bureau of Statistics of the Communist Party of China on May 11 showed that the producer price index (PPI) rose 6.8% year-on-year in April, the largest monthly increase since October 2017.
Bloomberg reported on May 14 that iron ore futures in Singapore plunged 11% at one point and rebar also moved lower as the Chinese Communist government took new measures against steelmakers; base metals have also come under pressure in recent days, with copper prices down about 5% from record highs set on Monday.
Copper prices on the London Metal Exchange (LME) fell 1.1 percent to $10,224.50 a tonne at 11:37 a.m. local time, after hitting a high of $10,747.50 on Monday.
Other base metals fared better on Friday, while aluminum prices hit a 3.2% weekly decline, the biggest one-week drop in a year.
Fitch previously analyzed that ferrous commodities such as iron ore have room to rise, but prices may fall back in the second half of this year as supply improves and demand growth slows.