The Dalian iron ore price dived more than 8% on Friday after China’s regulators and industry association issued warnings earlier in the week against recent unusual price moves of the key steelmaking ingredient.
Earlier on Friday, the National Development and Reform Commission (NDRC), which is the country’s state planner, said it and the market regulator 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 NDRC, which has issued three public announcements so far this year after iron ore prices surged more than 20%, said it had warned information providers that they should not fabricate any news or drive up prices, and pledged to crackdown on any irregularities.
The Dalian bourse, following the state planner’s statement, doubled transaction fees for some iron ore futures contracts. That move is effective on February 16.
Meanwhile, the China Iron and Steel Association, said on Friday night that it found some companies involved in iron ore businesses had “violated business ethics” by issuing and hyping fake information, which seriously disrupted market order and hurt the rights of the market participants.
“As authorities are paying close attention to iron ore, prices could weaken affected by market sentiment,” GF Futures analysts wrote in a note.
A Shanghai-based ferrous e-commerce platform, Esteel.com, said in a notice on Wednesday morning that one of its previous releases mentioning a possible decline in iron ore shipments from Rio Tinto and Atlas was not authorized by the two companies, nor verified, calling it “false information” and saying the post had been taken down.
The most actively traded iron ore futures contract on the Dalian Commodity Exchange was down more than 8% to around 766 yuan ($120.53) per tonne as of 1333 GMT. It surged nearly 6% earlier on Friday and closed at 805 yuan a tonne in afternoon trading.
According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $149.30 a tonne during morning trading, down 2.3% compared to Thursday’s closing.
Supply
Vale delivered less iron ore than expected in a welcome boost to a wavering recovery in prices.
Fourth-quarter production came in at 82.5 million tonnes, compared with the 85.6 million tonnes average estimate.
Vale’s output also fell short of the third quarter and the year-ago result.
The company’s full-year output came in at the low end of its 315 million to 320 million tonnes on guidance range. Vale’s ongoing recovery from a 2019 tailings dam disaster makes it a major swing factor on the supply side.
Vale kept its 2022 projection of 320 million to 335 million tonnes despite rain interruptions last month.
Bloomberg Intelligence sees global iron-ore supply contracting this year after growing in 2021 as producers emphasize value over volume.
($1 = 6.3551 Chinese yuan renminbi)
