China's Development and Reform Commission Took Measures Against Iron Ore Price Surge in 2022

SHANGHAI, Feb 22 (SMM) - At the beginning of 2022, in response to the sharp rise in iron ore prices, the National Development and Reform Commission has repeatedly emphasized strengthening the supervision and control of iron ore prices.

On January 28, 2022, relevant analysis believes that the current iron ore market supply and demand is generally stable, the domestic inventory is at multi-year high, and the recent quick price hikes are the result of speculation. The National Development and Reform Commission paid close attention to the price changes in the iron ore market, and conducted in-depth investigations with relevant departments, strengthened supervision, cracked down on illegal activities such as spreading false information, price gouging, and malicious speculation, and took more effective measures to effectively ensure stable iron ore prices.

On February 9, 2022, the Price Department of the National Development and Reform Commission and the Price Supervision and Competition Bureau of the State Administration for Market Regulation jointly interviewed relevant iron ore information companies and asked for the factual source of the information. They also remind and warn relevant enterprises that they must carefully verify and be accurate before releasing market and price information, and must not fabricate and publish false price information, or inflate prices. The National Development and Reform Commission and the State Administration of Market Supervision paid close attention to changes in iron ore prices, and will further studied and took effective measures to ensure the stable operation of iron ore market. At the same time, market supervision was strengthened, and violations of laws and regulations such as fabrication and distribution of price hike information and price gouging will be punished as soon as they are discovered.

On February 11, 2022, in response to the recent changes in iron ore prices, the Price Department of the National Development and Reform Commission and the Price Supervision and Competition Bureau of the State Administration of Market Regulation planned to dispatch a joint research team to some commodity exchanges and key ports to carry out iron ore market supervision and research. The research team planned to understand the recent changes in iron ore inventories and the participation of relevant companies in iron ore futures spot trading, listening to relevant parties on strengthening the joint supervision of the futures spot market, and severely punish those who fabricate and spread price hike information, hoard to speculate, inflate prices, etc.

On February 28, 2022, National Development and Reform Commission promised to take effective measures to strengthen the regulation and supervision of iron ore prices. Recently, the market prices of iron ore have risen sharply, and there have been many abnormal fluctuations during this period. Relevant analysis believes that the current iron ore market supply and demand is generally stable, the domestic inventory is at multi-year high, and the recent quick price hikes are the result of speculation. The National Development and Reform Commission pays close attention to the price changes in the iron ore market, and will conduct in-depth investigations with relevant departments, strengthen supervision, crack down on illegal activities such as spreading false information, price gouging, and malicious speculation, and further take effective measures to effectively ensure stable iron ore prices.

Looking back at the trend of iron ore prices in 2022, the National Development and Reform Commission expressed its high concern for the iron ore market price for the first time on January 28, which coincided with the Chinese New Year (CNY) holiday. After the prices closing up sharply by 7.59%, the market fully digested the news during the CNY holiday, hence the remark did not have a significant impact on the market after the CNY.

On February 9, 2022, iron ore information companies were interviewed and they were asked not to spread false news. Iron ore fell 5.90% in response, but rose again by 3.20% the next day. Therefore, on February 11, 2022, the National Development and Reform Commission dispatched a joint research team to monitor the iron ore market.

Then the iron ore price rally stopped, and fell 14.91% to 685 yuan/mt. Since then, iron ore prices remained volatile

However, on February 28, 2022, National Development and Reform Commission promised to take effective measures to strengthen the regulation and supervision of iron ore prices, then interviewed iron ore information vendors again. But the impact on iron ore market was not immediately reflected.

On the same day, iron ore closed up 2.69% and hit a half-year high of 870 yuan/mt, then started to fall.

Since November 2022, iron ore prices rebounded again amid the favourable macro front as the domestic pandemic control policies were optimised. Meanwhile, the stimulus policy of real estate landed smoothly, which led to a bullish outlook among the steel market.

In December 2022, the favourable macro form extended and the restocking demand was released, hence the iron ore prices were boosted further and hit the highest point at 867.5 yuan/mt on the last trading day of 2022. However, at the beginning of 2023, the iron ore prices declined slightly under the weak fundamentals.

On January 9, 2023, under the influence of the National Development and Reform Commission holding a meeting to study the iron ore price supervision, iron ore prices fell sharply. But then iron ore ushered in four consecutive rises. As of the close on January 13, iron ore prices rose by 3.40% to 881 yuan/mt, setting a new high in the past six months.

On January 16, 2023, the National Development and Reform Commission interviewed iron ore information vendors, and remind and warn relevant enterprises that they must carefully verify and be accurate before releasing market and price information, and must not fabricate and publish false price information, or inflate prices. As such, iron ore prices fell 4.31% in response and continued to fall the next day.

On January 18, 2023, the Price Department of the National Development and Reform Commission, the Price Supervision and Competition Bureau of the State Administration for Market Regulation, and the Futures Department of the China Securities Regulatory Commission warned relevant iron ore trading companies and futures companies not to fabricate and spread price increase information and not to speculate excessively. But the market did not react much to the news. Iron ore prices continued to rise and as of the close on January 20, iron ore prices stood at 865 yuan/mt.

After the Chinese New Year holiday, the favourable policy boosted the real estate industry. However, steel mills still maintain a low raw material inventory in the case of poor profits. With the improvement of future demand and the further resumption of steel mills, restocking demand for iron ore drove up the prices.