Iron ore loses steam after China warns against false price information
IRON ORE PRICES PLUNGED FROM THEIR RECENT FIVEMONTH HIGH POSI TION AFTER REGULATORS in China, the world’s largest buyer and the industry association, issued warnings against false price disclosure of the key steelmaking ingredient and pledged to crackdown on any irregularities.
The most actively traded iron ore futures contract on the Dalian Commodity Exchange was down nearly three percent to close at 805 yuan a tonne.
Earlier in the day, China’s National Development and Reform Commission (NDRC), the country’s state planner, said it would dispatch investigation teams to the commodity exchange and key ports to look into iron ore inventories and trading in the spot and futures markets.
The commission, which has so far in 2022 issued three public announcements after iron ore surged over 20 percent to an all-time high, noted that it had warned information providers against fabricating any news aimed to drive up prices.
Commenting on this, GF Futures analysts said the authorities’ continuous scrutiny of iron ore could weaken prices affected by market sentiment.
On the supply side, market data showed that Vale, the largest producer of iron ore delivered less iron ore than expected, with the Brazilian company’s ongoing recovery from a 2019 tailings dam disaster seen as a major swing factor on the supply side.
Fourth-quarter production was recorded at 82.5 million tonnes, compared with the 85.6 million tonnes average estimate. It was also observed that Vale’s output fell short of figures supplied in the third quarter.
The company’s full-year output came in at the low end of its 315 million to 320 million tonnes on guidance range.
Analysts also projected that global iron-ore supply is likely to fall in 2022 after recording a rise in 2021 as producers emphasise value over volume.