After China warned of “excessive speculation” of raw materials such as iron ore and copper, global commodity prices have plummeted. People are increasingly concerned about the rapid growth of inflation.
Several large economies relax Covid-19 restrictions, and the cost of raw materials is soaring. However, China’s National Development and Reform Commission stated that it would adopt a “zero tolerance” approach to monopolistic behavior. This attitude is towards the commodity companies.
Various government departments and industry leaders held meetings in Beijing on Sunday. The company issued a statement saying that the latest round of price increases was due to multiple factors.
The meeting clearly stated that relevant regulatory authorities will pay close attention to commodity price trends in the next step.
According to Reuters, the price of iron ore used in steel production dropped sharply. With the most extensive trade volume, the Dalian iron ore contract falling by 9.5%. The prices of steel bars and hot-rolled coils on the Shanghai Stock Exchange also fell by 7%.
The prices of other important industrial metals, including copper, aluminum are also under pressure
The constituent stocks of the London Financial Times 100 index also fell. The precious metals company Fresnillo fell the most on Monday, with a drop of more than 2.5%, and the copper miner Antofagasta fell by more than 1.8%.
China’s crackdown is affecting the price of base metals. It is likely to be weakened in the narrative that “inflation is coming.”
The stimulus support for metal-intensive industries is showing signs. The authorities are now beginning to worry about import inflation. Beijing is also partially solving its manufacturing problems, which is most evident in steel. After the government set targets to curb output and ordered a decline in production this year, prices soared to record highs. Instead, production surged to record levels in April.