Iron ore futures fell for most of the week, in awaiting of more meeting outcomes from the market regulators on the issue of price fabrication and false information.
The futures of Dalian Commodity Exchange (DCE) for May delivery then fell by 3.79% day-on-day or down RMB 27 to RMB 684.50/mt, during the day trading session on Thursday.
The rebar futures also went down by 1.97% or down RMB 94 to RMB 4,686/mt, during the day trading session.
Chinese traders ask by regulators to stop hoarding
China’s market regulators, National Development and Reform Commission (NDRC) and the State Administration of Market Regulation (SAMR) issued a statement on Thursday after meeting with industry players.
The statement asked traders to verify on the irregularities of iron ore market from market malpractices like hoarding goods to drive up prices, after state authorities listed down a series of companies with high stockpiles levels.
According to SteelHome consultancy, the country’s weekly port inventory reached 156.35 million mt by Feb 11, just shy of the record-high level of 157 million mt achieved by the end of 2021.
Hence, traders were encouraged by regulators to cut down their iron ore stocks reasonable levels, by offloading surplus stocks to stabilize prices.
Growing optimism for increased steel consumption toward Q2
More mills expected more relaxation of output restriction after the Winter Olympics and with higher output level toward Q2 period.
Trade participants also expected some good outcomes after the market regulators met with trading players this week to monitor on good price discovery mechanism and dissemination of information.
Meanwhile, lump demand was stable, amid falling lump inventories week by week, while other alternatives like fines and pellets stocks were rising in comparison. However, the lump premium was still rather competitive as to other alternative and remained favorite to buyers.