What’s new: China’s black metal futures plunged across the board Friday after regulators summoned iron ore futures companies for a meeting to address concerns over recent price hikes.
The main futures contract for iron ore delivery in January 2024 closed at 827.5 yuan ($113) per ton Friday, down 2.07% from the previous day. The contract for rebar steel dropped 1.98% to 3,717 yuan per ton, and for coking coal, 4.09% to 1,642 yuan per ton.
The broad decline followed news that the National Development and Reform Commission and the China Securities Regulatory Commission convened a meeting Thursday with futures companies to discuss the iron ore market and price trends.
Iron ore prices have surged since mid-August, despite stable supply and demand conditions, and they now face downward pressure, according to the meeting.
Regulators told futures companies to strengthen market research and information disclosure, enhance risk warnings for investors and encourage rational trading.
The background: Futures for iron ore, a raw material for the steel industry, jumped since August after a volatile first half, partly driven by expectations of reviving demand from the property sector.
Domestic iron ore futures prices climbed nearly 20% from around 700 yuan per ton in mid-August to peak around 860 yuan in early September. The Platts iron ore price index also gained 20% from its lowest point in late May, reaching $119.50 per ton Sept. 6.
Driving the growth was a recent flurry of policy moves to bolster the real estate industry, including easing mortgage loan requirements and relaxing purchase rules, according to China Futures Co. Ltd.
Global steel supply has been relatively tight due to the pandemic and Russia’s invasion of Ukraine, leading to strong growth in Chinese steel exports this year and driving up domestic demand for iron ore, according to Wang Guoqing, director of Lange Steel Information Research Center.
China’s steel exports totaled 58.8 million tons in the first eight months, up nearly 30% year-on-year, according to the General Administration of Customs. During the same period, China imported 776 million tons of iron ore and concentrates, a 7.4% year-on-year gain.
Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
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