China to supervise commodity prices more closely after recent rises
China's National Development and Reform Commission said it, the Ministry of Industry and Information Technology, and other relevant authorities met major companies from the iron ore, steel, copper and aluminum industries on May 23 and asked them to take the lead in "maintaining price order" in commodity markets.
Chinese domestic rebar prices fell 4% to Yuan 5,360/mt ($834/mt) on May 24, to be 13% below the peak of Yuan 6,135/mt seen on May 10, according to S&P Global Platts data. Prices increased Yuan 1,970/mt, or 47%, from Jan. 11 to May 10.
The meeting cited excessive speculation as a major reason for significant price rises in the domestic commodity market, including steel, although global prices had also played a part.
Authorities will step up their supervision of futures and spot markets to detect abnormal trading and malicious speculation, and will crack down on illegal behaviors such as hoarding, and driving up prices through price collusion or false information, according to a document from the NDRC.
The meeting was part of a series of government interventions, which started mid-May, to curb the rising prices of different commodities, which had already hurt some end-user manufacturers.
Steel prices
The significant steel price rises from January to mid-May were mainly driven by market speculation that China might force its 2021 steel output to be lower than 2020 levels in a bid to curb pollution and cut carbon emissions, market sources said.
The rise in steel prices in the past few months largely outpaced the fundamentals around supply and demand and, therefore, it was not surprising to see prices dropping back of late as the government has begun to crack down on speculators, sources said.
Some sources expected prices to continue to trend downwards in May and June, partly due to the crackdown on speculation and partly due to low seasonal demand.
However, domestic steel prices may return to an uptrend when the rainy season along the Yangtze river ends and demand starts to recover in late June, they said.
