Benchmark iron ore futures fell on Tuesday, extending Monday’s severe losses, as traders fled the commodity over fears of a Chinese crackdown after Beijing said it would take action against what it called the spread of price misinformation. On China’s Dalian Commodity Exchange (DCIOcv1), the most-traded iron ore for May delivery fell as much as 9.7 percent to 701 yuan ($110.35) per tonne, the lowest since Jan. 18. The front-month March contract for the steelmaking component on the Singapore Exchange (SZZFH2) fell as much as 11.4 percent to $131.55 a tonne.
“Iron ore futures remained under pressure given China’s intention to prevent speculative price rises,” ANZ commodity strategists wrote in a note.
The sustained sell-offs reflected mounting investor worries, according to the Chinese journal Economic Observer, which reported that China’s state planners and market regulators were planning to convene some local iron ore dealers later in the day for a “reminder and warning symposium.”
The National Development and Reform Commission of China has doubled down on a warning made last week against certain information providers it alleged were faking iron ore prices. It stated that teams would be dispatched to investigate port inventories as well as activity in spot and futures markets.
The Dalian exchange announced an increase in the transaction fee for futures contracts for February to May deliveries, in what appeared to be a concerted effort to cool a sustained rally – Dalian iron ore hit its highest in more than five months last week – in what appeared to be a concerted effort to cool a sustained rally.
Spot prices for benchmark 62 percent-grade iron ore in China fell to $149 a tonne on Monday, down from a near six-month high of $152.50 last week, according to data from consultancy Steel Home. (SH-CCN-IRNOR62)
On the Shanghai Futures Exchange, construction steel rebar (SRBcv1) lost 2.5 percent, while hot-rolled coil (SHHCcv1) fell 2.3 percent.
The price of stainless steel (SHSScv1) increased by 1.3 percent.
Dalian coking coal (DJMcv1) remained almost unchanged, while coke (DCJcv1) fell 0.1 percent.