Steel, iron ore prices slide 6% on China crackdown, weather
Posted on 27 May 2021
Chinese steel and iron ore prices tumbled on Wednesday after the Shanghai Futures Exchange vowed to look into “abnormal transactions”, piling on the government’s earlier attempts to temper commodity inflation through warnings.
Shanghai construction steel rebar SRBcv1 ended daytime trading 6% lower at 4,667 yuan ($729.79) a tonne, after earlier touching 4,661 yuan, its lowest since March 24.
Hot-rolled coil SHHCcv1 shed 5.4% to 5,017 yuan a tonne, after earlier hitting a two-month low of 5,011 yuan.
The sell-off intensified during afternoon trading, dragging steelmaking ingredients lower, after Shanghai Futures Exchange Chairman Jiang Yan told a forum the bourse would “closely track market changes, vigorously investigate abnormal transactions”.
Iron ore on the Dalian Commodity Exchange DCIOcv1 dropped 6.1% to 994.50 yuan a tonne, just above the day’s low of 992 yuan, its weakest since April 12.
On the Singapore Exchange, iron ore SZZFN1 slumped 5.7% to $166.75 a tonne by 0716 GMT.
Trading began with markets already under pressure on worries about monsoon rains in China’s south and the scorching temperature in the north slowing down construction activity, which could dampen demand for rebar and iron ore.
“The domestic construction…off-season is coming soon,” analysts at Huatai Futures said in a note.
Rain in some parts of central and southern China has hit record highs.
But regulatory concerns also lingered.
“We do not rule out the possibility of (a rollout of further) regulatory policies,” Huatai analysts said, after China vowed to strengthen price controls on key materials including iron ore under a five-year plan.
Prices of iron ore have dramatically dropped since hitting record highs on May 12. Benchmark 62% ore’s spot price steadied at $192.50 a tonne on Tuesday, but was down 17% from its peak, SteelHome consultancy data showed.
Shanghai stainless steel SHSScv1 lost 0.9%.
Dalian coking coal DJMcv1 fell 0.9% while coke DCJcv1 slumped 1.7%.Source : Reuters