Commodity firms warned, told to keep prices stable
Chinese authorities have admonished key enterprises in the bulk commodity sector to rein in market irregularities and keep commodity prices stable, according to the National Development and Reform Commission.
The NDRC, China's top economic planner, along with the industry ministry, the state-owned assets regulator, the State Administration of Market Regulation, and the China Securities Regulatory Commission, reminded companies with market influence in sectors such as iron ore, steel, copper and aluminum at a Sunday meeting to run in accordance with laws and regulations and keep the market prices in order.
Industry associations such as the China Iron and Steel Association and the China Nonferrous Metals Industry Association also attended the meeting.
The recent price rally in commodities is partly driven by the transmission of global price rises, but excessive speculation in the market has also pushed up the prices, it was revealed in the meeting.
Key enterprises were urged to promote the coordinated development of upstream and downstream industries and keep the industrial ecology healthy.
The meeting also pressed the enterprises against irregularities such as price manipulation, the making and spreading of false information on price hikes, price gouging and hoarding.
For the next stage, authorities will closely monitor the trend in commodity prices, strengthen regulation over the co-movement between the futures market and spot market of bulk commodities and adopt a zero-tolerance attitude on irregularities.
Enterprises and industry associations at the meeting pledged to regulate production activities and operate in keeping with the law to keep the market and prices stable.
Meanwhile, domestic industrial commodity prices plunged on Monday. The most-traded Dalian iron ore futures dropped 9.5 percent, while steel rebar and hot-rolled coil dived 7 percent on the Shanghai exchange. Copper and aluminium futures fell 2 percent and 4 percent respectively.
Commodities such as copper, coal, steel, and iron ore, of which China is the world's biggest user, have surged this year on rising demand as lockdowns to curb the COVID-19 pandemic have eased and government stimulus has boosted consumer spending globally.
Prices for 42 out of 50 major commodities rose over the April-to-May period, according to the Chinese National Statistics Bureau. Prices of steel and coal products surged over 10 percent on average from April to May, on top of a 9 percent inflation in steel in the first three months of this year, data from China's Iron and Steel Association showed.
China vowed to take measures to ensure the supply of commodities, curb unreasonable price increases and prevent transmission to consumer prices at the State Council's Executive Meeting chaired by Premier Li Keqiang last week.
The meeting outlined measures to better ensure the supply and stable pricing of commodities, including higher export tariffs on some iron and steel products, provisional zero import taxes on pig iron and scrap steel, and doing away with export tax rebates on some steel products.
"While the market continues to play a decisive role in resources allocation to ensure the supply of commodities and keep their prices stable, the government must better fulfill its responsibility. Any monopoly and hoarding will be cracked down under the law to step up market regulation," Li said.