China’s main industrial commodities tumbled on Thursday after the government announced stepped-up measures to keep a lid on soaring raw material prices which threaten to undermine the country’s economic recovery.
Prices of key steelmaking ingredients iron ore and coking coal , as well as steel products such as rebar and hot-rolled coil , all dropped more than 5% as traders offloaded supplies and speculators placed short-sided bets that Beijing's measures will trigger a further pullback in metals markets.
China's cabinet announced on Wednesday that it will strengthen management of commodity supply and demand to curb "unreasonable" prices and investigate behaviour that bids up commodity costs, spooking China's hoards of metal traders. read more
"Some of the measures could have an immediate impact on the supply demand balance, for example if the government decides to release some state reserve into the market," said Wood Mackenzie senior economist Yanting Zhou.
"Other measures will take effect over a longer time frame. However, these measures do have an immediate impact on price as it helps to manage the market expectation for further price increases," she added.
