China to build up commodity price controls

China will establish price controls on iron ore, copper, corn, and other major commodities in its 14th five-year plan for 2021 to 2025 to discuss irregular fluctuations in prices, the state planner announced on Tuesday.

The country will also watch and analyze commodity prices like crude oil, natural gas, and soybean, the National Development and Reform Commission (NDRC) announced in a statement.

(Local governments) should study and judge the import influence in-depth, quickly make proposals (on matters) such as reserves, import and export, fiscal and taxation, and financial adjustment measures, the statement declared.

The NDRC also told authorities to adjust cotton target price levels reasonably and adhere to the country’s minimum purchase price policy framework for rice and wheat. The government purchases these grains from farmers at a minimum price when the market falls under that level.

The move appears as Beijing prioritizes ensuring food security for its population of 1.4 billion.

The NDRC declared it would make a solid grain supply and sustain prices.

In energy markets, the state planner stated China would choose a new pricing mechanism for tapped storage and better price reforms in transmission and distribution of electricity to increase flexibility in the grid system.

For high-energy intensity and high-emission industries, (China) will complete differential and tiered electricity prices to support carbon reduction, the statement asserted.

Commodities prices in the world’s second-biggest economy have witnessed large swings this year inspired by post-epidemic demand recovery, global liquidity easing, and risky trading.

Beijing’s new moves following rising metals prices added to a spike in factory gate prices and more moderate growth in industrial production in April.

Government watchdogs have frequently driven industrial metal firms to keep market order, guaranteed more stringent inspections on physical and derivative markets, and inquiries into behavior that bid up prices.

Futures prices for commodities like iron ore and corn on the Dalian Commodity Exchange, steel and copper on the Shanghai Futures Exchange all scored historic highs this year.

On Monday, Premier Li Keqiang also stated that the government would attempt to stop growing commodity prices from being carried on to consumers.