Iron ore prices are plunging as investors flee the market on fears of a “suppression” from the Chinese government after Beijing warned it would act against the contagion. price misinformation.
Iron ore futures for May 2022 on the Dalian Commodity Exchange ended February 15, falling to the ceiling, down 10%, to 699 yuan ($110.08)/ton, the lowest level since from January 18. This is the second consecutive drop in price.
Iron ore for March term on the Singapore Exchange also fell 13.8% to $127.90/ton.
Imported iron ore (62% steel content, spot at Chinese seaports) the latest quote (February 14) also dropped to 149 USD/ton, away from the 6-month high reached last week, is $152.50 per tonne, data from consulting firm SteelHome shows.
Iron ore prices fell, pulling rebar prices on the Shanghai Futures Exchange last session down 2.8% compared to the previous session, while hot rolled coil fell 2.7%, while stainless steel remained outside. margin when increasing 1.4%.
Price of Australian iron ore imported into China
“Iron ore futures prices continue to come under pressure amid China’s determination to curb speculative upside,” said ANZ commodity strategists.
Indeed, the sharp sell-off in the market reflects investors’ growing fear that China’s national policymaking body will join the market regulator in convening traders. iron ore at home and abroad at a meeting on February 17 in an effort to ensure market stability, information from Reuters said.
China’s National Development and Reform Commission has doubled its warning level for information providers that it says are “faking up” iron ore prices. This is a concerted effort by Chinese agencies and departments to cool down the iron ore market in a sustainable way, including the announcement that it will increase transaction fees for iron ore futures contracts delivered from February. to May 2022.
It is known that iron ore prices on Dalian exchange last week rose to the highest level in 5 months. Since mid-November to last week, iron ore prices have increased by more than 50%, reaching $150 per tonne, forcing regulators to take some urgent actions, including port inspections, raising delivery fees, and more. translate forward contracts and warn against the introduction of false information.
“The price of iron ore will be very volatile in the future,” said Mike Henry, chief executive officer of major mining company BHP. Beijing’s balance in both wanting to stabilize the economy – the factor that promotes steel consumption, and to not affect commodity price inflation. Mr. Henry said that in 2022, Beijing will focus more on growth and increase spending on infrastructure.
In the immediate future, the iron ore market will face some difficulties this year, including China’s restriction on steel production.
However, some analysts question whether the aforementioned efforts to contain prices could have a lasting impact if the real market tightens further.
Atilla Widnell, chief executive officer of Navigate Commodities, said: “History has shown us that dramatic price drops are all followed by China’s claims to investigate and monitor iron ore prices only temporary in the short term”. Reduced supply from Australia and Brazil – coupled with increased steel production – has created a very balanced market, he said.
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