Iron ore price dropped on Wednesday following the Shanghai Futures Exchange promised to look into “abnormal transactions,” ranking on the government’s earlier efforts to temper commodity inflation through information.
Iron ore price on the Dalian Commodity Exchange fell 6.1% to 994.50 ($155.59) yuan a tonne, just above the day’s low of 992 yuan ($155.20), its lowest since April 12.
Shanghai construction steel rebar closed daytime trading 6% lower at 4,667 yuan ($729.79) a tonne, following earlier reaching 4,661 yuan, its weakest since March 24.
Trading began with markets already under stress on concerns regarding monsoon rains in China’s south and the hot temperature in the north, reducing down construction activity, which could discourage demand for rebar and iron ore.
The domestic construction off-season is arriving soon, analysts at Huatai Futures stated in a note.
Rain in some parts of central and southern China has scored record highs.
China’s steel prices have undergone a roller coaster ride
China’s economic solid momentum shifted slightly in May, as rising raw material prices pinched profits, businesses turned warier, and property and car sales underperformed.
That is the possibility of an aggregate index linking eight early indicators followed by Bloomberg, which shifted from April but remained in expansionary territory, underpinned by solid export demand.
Confidence amongst small and medium-sized enterprises, or SMEs, released in May from the highest level after the coronavirus outbreak in the past month, as stated in a survey of more than 500 companies by Standard Chartered Plc. The index gauging current performance decreased in the month while reducing the ‘expectations’ sub-index points to worries on future demand and profit margins.
Under the Chinese government’s swift, dedicated and concerted efforts to put down an unexpected spike in steel prices, a bubble that started to inflate in early May suddenly started to decrease in recent days. While the bubble explosion left many who raced to the feast licking their wounds, industry insiders and analysts stated it might necessitate months for the steel market to revert to normal.
China’s steel prices have undergone a roller coaster ride after May 1. Prices for steel products increased by more than 1,600 yuan ($250) per ton in two weeks, drawing the attention of the highest level of the Chinese government.
The government’s high-frequency responses entered a peak on Monday, with Chinese Premier Li Keqiang saying that it should be withdrawn that commodity price hikes are carried down to consumers. Steel prices then plunged, going to pre-May one levels.