Beijing’s market crackdown forecast causes China’s industrial commodities to slide

20.05.2021 - Evdokimov Roman
Beijing’s market crackdown forecast causes China’s industrial commodities to slide

Thursday saw the tumbling of China’s main industrial commodities following the government’s announcement that it is stepping up measures to keep prices from soaring further on raw materials which are a threat to undermine the economic recovery of the country.

The prices of iron ore and coking coal alongside other steel products like rebar and hot-rolled coil all declined by 5% resulting from traders offloading supplies and speculators placing short-sided bets that the measures Beijing willl resort to will cause further pullback in metals.

On Wednesday, it was announced by the Chinese cabinet that it aims to strengthen commodity supply management and propose the curbing of unreasonable prices and investigate behaviour that increases commodity costs that in effect repels hoards of Chinese metal traders.

Strong seasonal demand support iron ore prices, along with record high steel production, good steel margins, and subdued supply according to a number of analysts.

Senior Analyst at the CRU Group’s Beijing office, Richard Lu was quoted saying that the high steel prices, “will frighten some consumers at some point.”. However, he contends that steel margins’s good disposition serves to encourage Chinese mills to continue operating intensively in the absence of more restrictions.

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