Iron ore prices fell on Thursday after China sought stricter oversight of commodity markets to curb exorbitant prices.
Benchmark 62% Fe fines imported into Northern China (CFR Qingdao) were changing hands for $211.85 a tonne, down 2%, according to Fastmarkets MB.
September iron ore on the Dalian Commodity Exchange ended daytime trading 5.7% lower at 1,142.50 yuan ($177.40) a tonne, after earlier hitting a three-week low of 1,102 yuan.
Rebar on the Shanghai Futures Exchange shed 4.7%, hot-rolled coil dropped 4.5%, while stainless steel slumped 2.8%. Dalian coking coal tumbled 8% and coke lost 4.8%.
The world鈥檚 biggest producer of steel products has sharply increased consumption of iron ore and other steel ingredients while ramping up output for use in producing home appliances and construction materials amid robust demand spurred by global stimulus measures.
On Wednesday, China鈥檚 cabinet vowed to strengthen its management of commodity supply and demand to curb 鈥渦nreasonable鈥� price increases and protect consumers.
鈥淐ommodity prices have come under pressure overnight amidst the broader risk-off sentiment and as China鈥檚 State Council warned about commodity prices,鈥� Tapas Strickland, Sydney-based economist for National Australia Bank told Reuters.
鈥淪till, the pullback in commodity prices overnight needs to be seen in the context of the sharp run-up this year.鈥�
Richard Lu, senior analyst at commodity consultant CRU Group鈥檚 Beijing office, said the skyrocketing steel prices 鈥渨ill frighten some consumers at some point.鈥�
鈥淭he commodities bull run is definitely not done yet,鈥� Eric Liu, head of trading at Chinese copper trader ASK Resources Ltd. told Bloomberg.
鈥淓very country is grappling with rising inflation, but as long as they don鈥檛 actually tighten monetary and fiscal policies, commodity prices can hardly cool off.鈥�
鈥淔or the time being, global commodity demand signals are still firing on all cylinders, with the recent weakening still consistent with noise,鈥� TD Securities analysts led by Bart Melek said in a note. But 鈥渢he context points to risks of normalizing growth.鈥�
Supply
Even though the announcement聽was expected in a few days, BHP (ASX, LON, NYSE: BHP) reported on Tuesday the delivery of the first production at its South Flank iron ore project in Western Australia.
South Flank is BHP鈥檚 preferred option to聽replace the 80 million tonne-a-year Yandi mine, which is reaching the end of its mine life.
The project is expected to create 2,500 construction jobs, more than 600 operational roles and generate opportunities for Western Australian suppliers. The mine is expected to produce iron ore for more than 25 years.
(With files from Bloomberg and Reuters)