BEIJING: Dalian and Singapore iron ore futures fell on Wednesday, as another price warning from China’s state planner weighed on market sentiment.
China’s National Development and Reform Commission said it would closely monitor the iron ore market and take steps with relevant departments to limit irrational price increases.
“We feel the government’s tone as reflected by its wording is more strict compared to those demonstrated in statements released on its WeChat,” said a Shanghai-based iron ore analyst, who requested anonymity because he is not authorised to speak to the media. The most-traded September iron ore on the Dalian Commodity Exchange (DCE) fell 1.15% to 776 yuan a tonne, as of 0320 GMT.
Iron ore prices have risen nearly 2% so far this year. On the Singapore Exchange, the benchmark May iron ore was down 0.61% at $117 a tonne, as of 0310 GMT. Other steelmaking ingredients coking coal and coke, however, posted slight gains. Coking coal rose 0.32% and coke edged up 0.34%.
Meanwhile, stronger-than-expected China economic growth raised fears of fewer stimulus policies in the second quarter, weighing on the ferrous metals market. “The performance in the second quarter is typically stronger than that in the first one.
Since the (economic) performance is better than expected, we are concerned that the government will not lay down many supportive measures to further boost the economy,” said a Rizhao-based iron ore analyst. Steel futures were mixed. Rebar on the Shanghai Futures Exchange declined 0.4% to 3,936 yuan a tonne, hot-rolled coil fell 0.54%, wire rod shed 0.5% and stainless steel climbed 0.75%.
Analysts played down the impact of the latest round of production cuts by some electric arc furnace (EAF)-based steelmakers in South China’s Guangdong and East China’s Zhejiang provinces. EAF-based steel output accounts for a small portion of China’s total steel production.
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