China is taking steps to lower soaring commodities prices.
The Chinese government in Beijing has threatened to impose severe penalties on companies that engage in excessive speculation or spread fake news related to prices for metals and other commodities.
Officials in Beijing will show "zero tolerance" for monopoly behavior and hoarding, the National Development and Reform Commission said meeting with leaders of top metals producers.
The push to rein in surging metals prices rippled across global markets, with steel dropping as much as 6% and iron ore tumbling by close to the daily limit before stabilizing later in the session.
The warning from China comes as commodity prices are now near the highest level in almost a decade. A broad surge in commodities prices fuels fears that faster inflation could dent economic growth in China and elsewhere.
Investors have been piling into industrial metals on bets that the world will rebound strongly from the pandemic, but concerns about the knock-on impact on demand are rising as manufacturers are forced to raise the cost of finished goods.
There’s been a lot of attention from Chinese policy makers on commodities in recent weeks. China’s factory-gate prices rose at their fastest pace in more than three years in April, sparking concerns that costlier raw materials could hamper the economic recovery or feed into higher consumer prices.
China’s V-shaped demand rebound late last year has helped ignite a global commodities rally. Stimulus support for metal-intensive sectors is showing signs of cresting, however, and authorities are now starting to worry about imported inflation.
Chinese steel rebar futures closed 2.7% lower on Monday (May 24). Hot-rolled coil fell 3.2% and iron ore dropped 3%, after earlier being down more than 7%. Base metals were mostly lower, with aluminum dropping 1.4% to $2,336 U.S. a ton on the London Metal Exchange.
Copper traded little changed at $9,886 U.S. a ton, after losing as much as 0.9% earlier. Prices slid 3.5% last week, the most since September.
