China's NDRC busy stabilizing commodity prices

In the first week after the Chinese New Year (CNY) break, China's National Development and Reform Commission (NDRC) has been busy with stabilizing the prices of a few industrial and agricultural products such as iron ore and coal.

The seaborne iron ore prices fluctuated widely by $3-7/dmt over February 4-10, which was partly due to the market reaction to some misinformation on the market regarding iron ore supplies, Mysteel Global noted.

The commission, the regulator of key commodities prices in the series of sectors including ferrous, nonferrous, agriculture and construction materials in China, have held talks with related iron ore pricing index providers recently, requesting all to verify information before publishing and to uphold accuracy and correctness in their market news and pricing indices, it shared via its WeChat official account on February 9.

"We will closely monitor iron ore prices, and will explore the options to take further and efficient measures to stabilize the iron ore price, while on the other hand, we will crack down in a timely manner on any wrongdoings such as misinformation and price play-ups," it stated.

It has been a rather frequent occurrence for NDRC to step in to cool down iron ore prices especially in the past year or so, though some market sources doubt the effectiveness in the near term, sharing that volatility may be hard to avoid with the disparity in market outlooks.

Other than iron ore, NDRC has also held talks with coal producers in China to stabilize coal prices, requesting them to recover their output further after the holiday and warning against hiking prices unreasonably, according to its other WeChat post on February 9. NDRC has notified the market of thermal coal price caps as a guidance too, a market source in North China's Shanxi province noted.

Earlier on in a February 8 WeChat post, NDRC also shared its observation on the slump in domestic pork price, disclosing the central government's intention to stabilize the price via absorbing some supplies into national reserve.

For this year, market sources expect volatility in commodities prices in general, as overseas economies are struggling with inflation, global logistics are still with challenges, and global supply chains have been disrupted by the new waves of COVID-19 variants now and then in various countries, and China, unavoidably, will be impacted too but at a more moderate degree as it was able to control its Consumer Price Index (CPI) growth at 0.9% on-year for 2021.

Written by Hongmei Li, li.hongmei@mysteel.com

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.