Iron ore dips after Chinese regulators launch probe
(Kitco News) - The Chinese state planner, the National Development and Reform Commission (NDRC) has announced they are to research hoarding and speculation in the Iron ore market. The NDRC stated that new rules on the management of price indexes for commodities and services will be enacted on 1st August and will standardize price index compilation and transparency of information.
China's concern is understandable as factory gate inflation in China is running at its highest levels since 2008 and is feeding into inflationary pressures and undermining the competitiveness of its exporters. The nation's ability to do anything material and sustainable to commodity prices is questionable.
The NRDC visited the Beijing Iron Ore Trading Center Corporation (COREX) and said they will be looking into pricing and inventory at the exchange. They also said, "Iron ore prices have risen significantly and remain high, putting pressure on production and operation at mid and downstream companies,". They would also "strictly punish and disclose" irregularities such as hyping prices and hoarding, and maintain good market order, said the statement.
BMO said "Dalian futures dropped 6.8% with SGX futures now back below $200/t. We would highlight that current levels are still very healthy for iron ore producers, having held up much better than base metals and steel over June to date. However, with renewed steel plant inspections and sintering restrictions, we could see further downward pressure into July.".