Cranes unload imported iron ore at the Lianyungang Port in East China's Jiangsu Province. Photo: VCG

China's top economic planner said on Monday that it will strengthen daily supervision of spot and futures markets for iron ore to stabilize market prices in view of recent price hikes. 

The National Development and Reform Commission (NDRC) and the State Administration for Market Regulation recently visited the Dalian Commodity Exchange (DCE) to carry out a joint investigation, said the NDRC on Monday.

The NDRC said it is highly concerned about price changes in the iron ore market. It will conduct in-depth investigations, strengthen supervision, severely crack down on illegal activities such as spreading false information, price gouging and speculation, and study other effective measures to ensure the smooth operation of iron ore market.

Domestic inventories are at a multi-year high. Analysts said that since the supply-demand balance is stable, there must be speculation behind the sharp price hike of iron ore.

On February 17, the NDRC investigated iron ore stocks at Qingdao Port in East China's Shandong Province. It then asked iron ore trading enterprises to release excessive stocks and restore them to a reasonable level as soon as possible. The NDRC said it will check whether illegal activities such as hoarding and price gouging are taking place.

After a series of notices, iron ore prices started to fall. Iron ore futures reached a daily high of 745 yuan ($118) per ton on Monday, according to data from the DCE.

The iron ore futures price started to rebound after hitting the lowest point of 509.5 yuan per ton on November 19, 2021, and climbed all the way to a high of 849.5 yuan on February 11, up by nearly 66.7 percent, per the DCE.

As of February 18, the total size of imported iron ore inventories exceeded 160 million tons, the highest since May 2018. Iron ore is the main input for China's steel production, 80 percent of which relied on imports.

The NDRC said on Wednesday that it will shorten the free storage period of iron ore at ports and increase the cost of port hoarding, in a bid to prevent excessive stockpiling.

"Iron ore is still in a situation of high inventory and relatively low demand. The NDRC pushed for the release and transfer of port stocks to the market, which will be helpful in reducing abnormal hikes in iron ore prices," said an industry insider.

Industry insiders said that Russia-Ukraine tensions should be also considered. Prices of iron ores from Russia and Ukraine will be pushed up and regional conflicts will make it difficult for Black Sea ports to handle goods, and shipping costs will also increase.