Dalian iron ore falls as China intervention fears weigh

Dalian iron ore futures ended lower on Wednesday after a volatile daytime session, as concerns about China’s regulatory environment tempered optimism about demand prospects for the steelmaking ingredient in the world’s top steel producer.

The most-traded iron ore for May delivery on China’s Dalian Commodity Exchange (DCIOcv1) slipped 0.8% to 700 yuan ($110.64) a tonne, after advancing for two days and moving between losses and gains throughout the session.

Chinese authorities will prevent “excessive hoarding” of iron ore and help ensure that traders of the commodity bring inventories back to a reasonable level as soon as possible, the country’s state planner said on Wednesday.

The latest statement from the National Development and Reform Commission followed its meeting with the market regulator on measures to shorten the free storage period for iron ore traders and boost costs of portside inventories.

On the Singapore Exchange, iron ore’s front-month March contract (SZZFH2) was up 1.7% at $139 a tonne, as of 0705 GMT, after earlier touching $141.50.

Despite intensified efforts from Chinese regulators to rein in the iron ore rally this year to curb inflationary pressures, analysts said hopes for increased demand in the near term and the possibility of disruptions in supply from top exporters Australia and Brazil could lend support to prices.

Still, iron ore traders were cautious as Chinese regulators kept a watch over the market.

“We would expect authorities to become much more ‘active’ again (in talking down prices) as and when iron ore prices gravitate towards recent highs,” said Atilla Widnell, managing director at Navigate Commodities in Singapore.

Construction steel rebar on the Shanghai Futures Exchange (SRBcv1) slipped 0.7%, while hot-rolled coil (SHHCcv1) shed 0.4%. Stainless steel (SHSScv1) fell 2.7%.

Dalian coking coal (DJMcv1) climbed 2.3%, extending gains to a sixth session, partly supported by concerns over tight supply. Coke (DCJcv1) gained 1.6%.
Source: Reuters (Reporting by Enrico Dela Cruz in Manila; Editing by Subhranshu Sahu and Rashmi Aich)