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Dalian and Singapore iron ore futures fell on Wednesday, as another price warning from China’s state planner weighed on market sentiment.
China’s National Development and Reform Commission said it would monitor the iron ore market closely and take steps with relevant departments to limit irrational price increases.
“We feel the government’s tone as reflected by its wording is more strict compared to those demonstrated in statements released on its WeChat,” said a Shanghai-based iron ore analyst who requested anonymity because he is not authorised to speak to the media.
The most-traded September iron ore on the Dalian Commodity Exchange (DCE) ended daytime trading 0.96% down at 777.5 yuan a tonne. Iron ore prices have risen nearly 2% so far this year.
On the Singapore Exchange, benchmark May iron ore SZZFK3 was 0.2% up at $117.95 a tonne at 0725 GMT after regsitering some losses in the morning session.
Prices of two other materials used in steelmaking, coking coal and coke, also weakened, though at a slower pace. Coking coal DJMcv1 eased by 0.22% and coke DCJcv1 edged down 0.1%.
Meanwhile, stronger than expected economic growth in China raised fears of reduced stimulus in the second quarter, weighing on ferrous metals.
“The performance in the second quarter is typically stronger than that in the first. Since the (economic) performance is better than expected, we are concerned that the government will not lay down many supportive measures to further boost the economy,” said a Rizhao-based iron ore analyst.
Steel futures were mixed. Rebar on the Shanghai Futures Exchange SRBcv1 declined 0.63% to 3,927 yuan a tonne, hot-rolled coil SHHCcv1 fell 0.69%, wire rod SWRcv1 lost 0.16% and stainless steel SHSScv1 gained 0.13%.
Analysts played down the impact of the latest round of production cuts by some electric arc furnace (EAF) steelmakers in South China’s Guangdong and East China’s Zhejiang provinces. EAF-based steel output accounts for a small portion of China’s total steel production.