Chinese Ferrous Futures Plunge As Govt Seeks To Control Coal Prices
Chinese ferrous futures plunged on Friday, with steel and steelmaking ingredients all logging major weekly declines as Beijing beefed up efforts to control rising coal prices.
The most actively traded coking coal contract on the Dalian Commodity Exchange DJMcv1, for January delivery, closed 11.1% lower at 2,875 yuan ($449.80) per tonne, after touching the lowest daily trading limit of 14% in the afternoon session.
The contract dived 14% this week, giving up gains since late September, and posted its biggest weekly drop since the week ended May 5, 2017.
Coke prices on the Dalian bourse DCJcv1 closed 9% lower at 3,564 yuan a tonne.
China has stepped up regulations and investigations amid surging coal prices, pledging to crack down on irregularities that disrupt market order, and will study measures to prevent coal firms from seeking excessive profits and bring coal prices back to a reasonable range.
“Policies towards the coal sector to ensure supplies and stabilise prices are strengthening,” analysts with SinoSteel Futures wrote in a note, adding market participants were wary of high prices and withdrawing their money.
Benchmark iron ore futures DCIOcv1 slipped 1.5% to 690 yuan per tonne, tracking a drop in spot 62% iron ore, which fell to $120.5 a tonne on Thursday, according to SteelHome consultancy.
China’s steel futures also fell, fuelled by a drop in raw material prices. Steel rebar SRBcv1 on the Shanghai Futures Exchange ended down 6.5% at 4,900 yuan a tonne, the lowest closing price since May 27.
Apparent consumption for the construction material stood at 2.9 million tonnes this week, data from Mysteel consultancy showed, hovering around the lowest level since February 2020 when economic activities had come to a halt due to the coronavirus pandemic.
Hot rolled coils SHHCcv1 dropped 3.7% to 5,308 yuan per tonne and stainless steel futures SHSScv1 fell 2.4% to 20,260 yuan a tonne.
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