Iron ore futures recovered from the morning session slump to record gains in the afternoon session, amid lower steel prices and margins.
The futures of Dalian Commodity Exchange (DCE) for September delivery then inched up by 1.11% on-day or up RMB 11.50 to RMB 1,046.50/mt on Wednesday.
The steel rebar contract on the Shanghai Futures Exchange also inched up slightly by 0.23% or up RMB 11 day-on-day to RMB 4,817/mt.
Lower steel prices after state remarks on runaway commodity prices
Chinese steel prices continued to trend downward after recent statements for Chinese authority to curb high commodity prices on market speculations.
However, the Tangshan billet prices managed to gain by RMB 30 on-day to RMB 4,730/mt on Thursday, recovery from a plunge of RMB 240 previously. So far, the billet prices had fallen almost by RMB 1,090 since May 13, after regulatory bodies declared more price controls measures.
Likewise, the domestic rebar prices recorded at RMB 5,059/mt after falling a total of RMB 1,289/mt or down 20.3% since mid-May, according to Mysteel’s assessment.
More controls on banks in selling commodities-linked products to retailers
Chinese regulatory commission also took a tougher stance on banks in asking them to stop selling investment products linked to commodities futures to mom-and-pop buyers, due to volatile commodity prices.
According to Reuters, the China Banking and Insurance Regulatory Commission’s (CBIRC’s) has ordered its lenders, mainly Chinese major banks to report “clean-up progress” on commodities-linked investment products on a monthly basis to regulators.
Some trade participants interpreted the move as to prevent retailers’ losses from commodity-linked investment products like the crude oil portfolio issued by Bank of China a year ago.
Apparently, the Chinese regulators want to avoid investors and retailers from getting burnt by speculative commodity prices, given the recent swings in iron ore and steel futures prices listed on the Dalian Commodity Exchange and the Shanghai Futures Exchange.