On Monday, the iron ore market began to decline slightly. The reason for this can be attributed to the action of the Chinese National Development and Economic Reform Commission. The Chinese government has lowered the price of iron ore through its control measures. The government is also committed to combating hoarding and illegal and covert overselling in the market. The Chinese government’s intervention in iron ore and coal prices in the current situation has caused prices to fall temporarily. In the following, we will evaluate this issue. Please be with Artan Press.
*** Chinese government interference in the price of coal and iron ore
The Chinese government has been cracking down on iron ore and coal prices since last Thursday. As the Chinese government is thinking about reforming the infrastructure of its economic bases, it is strongly emphasizing on reducing production costs. This has led him to control the market for a period of six months. The costs of China’s structural reform will be borne by the country’s mining and manufacturing infrastructure. These restrictions are likely to be more severe from early August. The government has pledged to standardize and control the price index of mineral goods and services during this period.
*** Decreased profit of miners after the intervention of the Chinese government
Government policymakers and planners have announced that the NDRC and the Market Regulation Bureau visited the Beijing Iron Ore Trade Center (COREX) to review iron ore transactions and price changes this year. Iron ore futures on the Dalian Commodity Exchange fell 9% to 1,111 yuan ($ 173.14) per tonne on Monday, reducing their profits to 30% in 2021. This is not the first time that China has interfered in the raw material market. This situation has also caused fears and dangers in the global steel markets. The fine of 62% iron ore to Qingdao (north of China) (down 4.9% with a price change of $ 208.15 per tonne) is just a small part of the Chinese government’s involvement in the steel market.
*** Reduction of rebar rates, the first pulse after the intervention of the Chinese government
Prices traded by the Chinese for steel rebars used in construction have fallen by about 19 percent since the May peak. Integrated iron ore trading has also been accompanied by lower prices due to China’s control policies. In the current situation, these transactions are traded with the help of brokerage pages. Some of these goods, often published by private sector providers, have to pay a fee as a brokerage fee to settle the account. This has caused the transactions in this sector to be accompanied by more recession and decline. China has announced that it will reduce prices in several stages. Therefore, the situation of these markets is becoming more critical day by day in terms of the desire to buy.
*** Coal prices under the magnifying glass of the Chinese government
The NDRC also announced on Friday that an investigation into coal prices has begun, as China intends to cut coal prices in several stages. Therefore, in the current situation of Zalsang market, like iron ore market, it is caught in the ambiguity of purchase. Continuation of this trend in the short term can overshadow the situation of the iron ore and coal market all over the world. “Iron ore prices have risen significantly and remain high, putting pressure on the production and operation of small and medium-sized companies,” the statement said, citing a meeting of officials. Therefore, prices must be adjusted and this path will continue in earnest.
*** Reduction of steelmakers’ profit margins due to price inflammation
Reducing the profit margins of steelmakers will lead to a decline in the operating rate of steel furnaces in China, which in turn will reduce demand for raw materials. Another factor that has raised market concerns is the possibility of imposing export duties on Chinese steel, which will send large volumes to the domestic steel market and put additional pressure on prices. Therefore, we are expected to see a correction in the prices of steel products in China and consequently other markets in the short term.
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