Global commodity prices fell after a warning from China of “excessive speculation” in commodities, especially iron ore and copper, amid growing concerns about rapidly growing inflation.
Amid soaring commodity costs as several major economies ease restrictions on Covid-19, China’s National Development and Reform Commission (NDRC) has said it will take a “zero tolerance” approach to the disease. monopoly behavior and hoarding by commodity companies.
Releasing a statement after a meeting between several government departments and industry leaders in Beijing on Sunday, he said the latest round of price increases was due to multiple factors, “but also has many aspects reflecting overpeculation ”.
“The meeting made it clear that in the next step, the relevant regulatory authorities will closely monitor the trend of commodity prices, strengthen the joint monitoring of commodity futures and the spot market, ‘zero tolerance’ for illegal activities, will continue to increase inspections by law enforcement agencies. , and investigate anomalous transactions and malicious speculation, ”the NDRC said.
The price of iron ore – used in steel production – has fallen sharply, with the most traded Dalian iron ore contracts falling 9.5% according to Reuters. The price of steel rebar and hot-rolled coil also fell 7% on the Shanghai Stock Exchange.
The prices of other important industrial metals, including copper, aluminum and zinc, have also come under pressure. London-based mining companies on the FTSE 100 also fell, with the biggest precious metals company Fresnillo shot on Monday morning, down more than 2.5%, and copper miner Antofagasta down more than 1 , 8%.
China’s intervention comes as industrial companies around the world face soaring commodity costs amid rebounding demand for goods and services as Covid-19 restrictions are relaxed.
The recent price hike has pushed up input costs for UK manufacturers at the fastest rate since at least 1992, according to a closely watched survey, forcing many to raise prices – which is likely to fuel the consumer price inflation. Global financial markets have been rocked in recent weeks by growing concerns about the rapid growth in inflation emerging as the pandemic recedes.
Michael Grahn, chief economist at Danske Bank, said the Chinese crackdown was affecting the price of base metals. ” [This is] probably a breach in the ‘inflation is coming’ narrative, ”he said.