China steps in to manage commodity prices
BEIJING, Aug. 4 (Reuters) – Chinese policymakers are trying to contain soaring commodity prices – from coal to copper – that have squeezed manufacturers’ margins in the world’s second-largest economy.
The country has sold state reserves of imported coal, metals and corn to cool prices, but is buying pork to support a plummeting market.
Below is a timeline of actions taken by various government agencies:
April 20: China’s Ministry of Industry and Information Technology announced it would stabilize commodity prices, quell speculation, and encourage foundries and manufacturers to hedge in futures markets.
April 29: China’s main supplier of agricultural data, Cofeed, suspends its activities.
May 11: At least three major Chinese thermal coal price indexes suspend the release of daily valuations after spot prices rose 20% in one month.
May 12: China’s Dalian Commodity Exchange (DCE) proposes to lower standard iron content requirements in delivered ore against its flagship futures contracts to 61%.
May 14: Regulators in Shanghai and Tangshan Steel Center warn factories against price hikes, collusion and irregularities. Read more
May 17: DCE increases transaction fees on certain coke and coking coal contracts.
May 18: The National Development and Reform Commission (NDRC) announces that it will take action to stabilize the iron ore and steel markets. Read more
Shanghai Futures Exchange (ShFE) increases margins and trading limits on steel rebar and hot-rolled coil futures contracts.
May 19: The Chinese government asks coal producers to increase their production to meet peak summer demand and undertakes to step up the management of supply and demand for raw materials, in particular by building up stocks and by stepping up inspections on the spot and futures markets. Read more
May 23: NDRC, Ministry of Industry, and regulators urge major national metallurgical companies not to push up prices for copper, coal, steel and iron ore. They also pledge to strengthen inspections of futures and spot markets and to crack down on irregularities and speculation. Read more
May 25: The NDRC announced that it will strengthen price controls on iron ore, copper, corn and other commodities in its five-year plan 2021-2025, while strengthening the monitoring and analysis of prices of commodities such as crude oil, natural gas and soybeans.
May 26: China’s banking regulator bans banks from selling commodity-related products to retail buyers. Read more
June 9: Shortly after China announced that ex-factory prices had risen at their fastest annual rate in more than 12 years in May, the NDRC said China would closely monitor product price movements base and would step up its price forecast.
June 10: A team of government inspectors visit major coal centers in northern China to investigate inventories and illicit hoarding. Read more
June 16: The National Food and Strategic Reserves Administration (NFSRA) announces that it will distribute copper, aluminum and zinc through public auctions. Read more
June 18: Chinese state planner and market regulator jointly launch coal price survey. Read more
June 21: NDRC says it and the market regulator are investigating iron ore spot trade.
June 23: The NDRC says it and the market regulator have sent teams to Chinese provinces and cities to investigate the prices and supplies of bulk commodities.
June 27: The NDRC announced plans to build around 100 million tonnes of deployable coal reserves in the country this year.
June 28: NDRC launches urea market polls after fertilizer prices hit record highs.
The NDRC says the pork will be purchased for state reserves after live pork prices have fallen 65% since January.
July 4: The China Merchandise Reserve Management Center announces that it will purchase 20,000 tonnes of frozen pork for state reserves.
July 5: NFSRA auctioned off 50,000 tonnes of aluminum, 30,000 tonnes of zinc and 20,000 tonnes of copper.
July 9: The China Merchandise Reserve Management Center announces that it will purchase 13,000 tonnes of frozen pork.
July 15: China announces that it will release more than 10 million tonnes of coal from state reserves, adding to the more than 5 million tonnes already released this year.
July 16: The NDRC announced that China plans to increase its national coal reserve capacity to around 600 million tonnes, or 15% of its annual consumption.
July 17: China’s Ministry of Industry and Information Technology announced it would crack down on hoarding and commodity speculation.
July 18: The China Merchandise Reserve Management Center announces that it will purchase 20,000 tonnes of frozen pork.
July 29: The NFSRA releases 30,000 tonnes of copper, 90,000 tonnes of aluminum and 50,000 tonnes of zinc.
July 30: The NDRC said some large companies had suspended fertilizer exports to focus on domestic sourcing after summoning companies for hoarding and speculation talks.
August 1: New rules on the management of price indices for commodities and services come into force to standardize the compilation and transparency of price indices. Read more
August 3: China’s Dalian Commodity Exchange said it investigated 48 cases of “abnormal trading behavior” in July.
China Commodities and Energy team reports; Compiled by Shivani Singh; Editing by Kirsten Donovan
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