An iron ore mining site in Australia Photo: cnsphotos

China's market regulator warned iron ore traders not to engage in price gouging, and it will take effective measures to ensure market stability amid inflating prices of iron ore. It is a fresh move from the government as it vows to crack down on hoarding and speculation.

The State Administration for Market Regulation (SAMR) said that it is getting to details about port inventories of iron ore trading companies and their participation in futures and spot trading. The regulator warned enterprises not to fabricate and publish false price information and not to drive up prices.

The regulator, together with other departments including the National Development and Reform Commission (NDRC) and China Securities Regulatory Commission, called on relevant state-owned enterprises to take responsibility to help the government ensure supply and stabilize prices.

It is the latest move by the regulators, who have vowed to crack down on rising iron ore prices in recent days. On Friday, responding to rising prices of iron ore, the NDRC and SAMR said they will work together to inspect domestic commodity exchanges and major ports.

On January 28, the NDRC said on its official WeChat account that it will take strong measures to strengthen the regulation and supervision of iron ore.

The benchmark iron ore futures contract on the Dalian Commodity Exchange fell to 699 yuan ($110) per ton on Tuesday, down 17.7 percent from the high of 849.5 yuan per ton on February 11.

The China Iron and Steel Association (CISA) told the Global Times on Tuesday that it held a video conference with Simon Farry, vice president of sales and marketing for Rio Tinto's iron ore business.

Luo Tiejun, CISA vice-president, said the increased fluctuation of iron ore prices is not conducive to the development of the industry chain, and it is hoped that Rio Tinto will continue to attach great importance to the demand of Chinese steel enterprises, ensure the implementation of long-term contracts, and maintain market supplies. 

Rio Tinto said that it agreed that the price of iron ore should be determined by actual supply and demand, and the company will continue to carry out spot transactions to support open and transparent price formation system, and will do its best to meet market demand.

The Reuters reported earlier this month that prices for the key steelmaking ingredient were bullish after the week-long Lunar New Year holiday. Benchmark iron ore futures on the Dalian Commodity Exchange were above a five-month high on February 8, making their gains to more than 20 percent this year.

Global Times