Iron ore futures dipped at the close, after a volatile session with day peak recorded earlier in the morning session before plunging at the afternoon session.
The futures of Dalian Commodity Exchange (DCE) for September delivery then dropped slightly by 0.05% on-day or up RMB 0.50 to RMB 1,058/mt on Tuesday.
The steel rebar contract on the Shanghai Futures Exchange, followed similar trading pattern and slid down by 0.69% or down RMB 34 day-on-day to RMB 4,919/mt.
Extended price controls for key commodities
The bearish sentiment came after the announcement of Beijing policymakers on Tuesday, who made strengthening price controls for key commodities as part of their 14th five-year plan of 2021-2025.
Though, most of the market participants had interpreted the move positively and had factored in the trading after a series of price curbs over iron ore and steels price announced over the past two weeks by market regulatory bodies.
In the meantime, most market participants were waiting for more details on the price controls, while there were some market speculations if whether a price ceiling will be set for selected commodities.
Risk of supply tightness for iron ore
Some trade participants also expected some price upticks ahead due to supply tightness, despite state’s price control policy.
For instance, some of them were concerned over lower iron ore shipments as China imported 98.6 million mt of iron ore in April, down 3.5% on-month, due to lower Brazilian imports which dropped by 20% to 16.8 million mt.
However, there seemed to be some easing of supply tightness with better weekly iron ore shipments recorded in mid-May by Platts at 23.65 million mt, up 14.7% on-week by major miners including Rio Tinto, BHP, FMG, Vale and Roy Hill.