Chinese authorities criticise speculation in raw materials including iron ore and copper<\/p>\n
First published on Mon 24 May 2021 07.26 EDT<\/p>\n
Global commodity prices have tumbled after a warning from China about \u201cexcessive speculation\u201d in raw materials including iron ore and copper, amid mounting concerns over rapid growth in inflation.<\/p>\n
Against a backdrop of soaring raw material costs as several big economies relax Covid-19 restrictions, China\u2019s National Development and Reform Commission (NDRC) said it would show a \u201czero tolerance\u201d approach for monopoly behaviour and hoarding by commodities firms.<\/p>\n<\/p>\n
Issuing a statement after a meeting between multiple government departments and industry leaders in Beijing on Sunday, it said the latest round of price increases was down to multiple factors, \u201cbut also have many aspects reflecting overspeculation\u201d.<\/p>\n
\u201cThe meeting made it clear that in the next step, relevant regulatory authorities will closely follow the trend of commodity prices, strengthen the joint supervision of commodity futures and the spot market, \u2018zero tolerance\u2019 for illegal activities, continue to increase law enforcement inspections, and investigate abnormal transactions and malicious speculation,\u201d the NDRC said.<\/p>\n
The price of iron ore \u2013 used in steel production \u2013 fell sharply, with the most-traded Dalian iron ore contracts falling by as much as 9.5% according to Reuters. The price of steel reinforcing bars and hot-rolled coil also fell by 7% on the Shanghai exchange.<\/p>\n
Prices of other important industrial metals, including copper, aluminium and zinc also came under pressure. London-based mining companies on the FTSE 100 also tumbled, with the precious metals firm Fresnillo the biggest faller on Monday morning, down more than 2.5%, and the copper miner Antofagasta down more than 1.8%.<\/p>\n
China\u2019s intervention comes as industrial companies around the world face a surge in raw material costs amid the rekindling of demand for goods and services as Covid-19 restrictions are relaxed.<\/p>\n
The recent jump in prices pushed up UK manufacturers\u2019 input costs at the fastest rate since at least 1992, according to a closely watched survey, forcing many to raise their prices \u2013 which is likely to feed into consumer price inflation. Global financial markets have been rocked in recent weeks by growing concerns over rapid growth in inflation emerging as the pandemic recedes.<\/p>\n
Michael Grahn, the chief economist at Danske Bank, said the Chinese crackdown was affecting the price of base metals. \u201c[This is] likely a dent in the \u2018inflation is coming\u2019 narrative,\u201d he said.<\/p>\n