China's economic planner, the National Development and Reform Commission, announced June 17 it will index prices of key goods including steel, iron ore and other metals from Aug. 1 for three years to curb volatility after prices reached record highs in May. NDRC is also monitoring steel and iron ore companies following alleged price collusion, and the country's Strategic Reserve Board has started to auction copper, aluminum, zinc and iron ore from its strategic stocks in a bid to put a brake on rising prices.
"Recently, the Chinese have tried to push it [the metals market] down to bring it back to lower levels: I think this is a short-term game because the underlying fundamentals will keep it at these levels, " Glasenberg said in an interview during the Qatar Economic Forum.
"They're taking some material from the strategic stockpiles and putting that in the market -- how big the stockpiles are we don't know exactly ... They can do this for a while but eventually they'll need to restock the strategic stockpiles, they can't keep it at these low levels, so it's a short-term phase."
LME cash copper prices, considered a barometer of global economic health, plunged June 21 to $9,042/mt from multi-year highs of $10,212/mt on June 1, amid the latest Chinese moves.
On June 21, NDRC announced it was working with market regulators to identify entities involved in iron ore "hoarding" and "speculation," according to investment bank Liberum. "The report prompted another pullback in ore prices," said Liberum analyst Tom Price.
S&P Global Platts assessed the 62% Fe Iron Ore Index at $206.55 dry mt CFR North China on June 21, down $10.75/dmt from June 18, although prices rebounded June 22 to $212.70/dry mt. This compared with an all-time high of $233/mt for the steelmaking raw material May 12.
