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Dalian iron ore futures fell on Thursday, as Chinese authorities intervened to control soaring prices and weak property data fuelled concerns about demand from the key steel-consuming sector.
The most-traded January iron ore on China’s Dalian Commodity Exchange (DCE) closed 1.5% lower at956 yuan ($131.77) per metric ton, after rising 1% in the previous session.
On the Singapore Exchange, the benchmark December iron ore edged up0.1% at $130.04 a ton.
“The recent sentiment-driven surge in iron ore prices has caught the attention of Chinese authorities,” said Atilla Widnell, managing director at Navigate Commodities.
“The National Development and Reform Commission (NDRC) is investigating what they consider to be “unreasonably high” prices, and the Dalian has adjusted iron ore futures trading limits.”
China’s state-backed DCE on Wednesday set a limit on daily trading volumes for iron ore futures at no more than 500 lots on contracts for January to May 2024 delivery.
Atilla said “the downside shock should only be temporary, with bulls seizing the opportunity to buy the dips”.
China’s new home prices fell for the fourth month in October, official data showed, as government support measures did little to lift the gloom hanging over the country’s consumers and its debt-laden property sector.
Crude steel output also fell for the fourth consecutive month in October, data showed on Wednesday, as more mills implemented furnace maintenance amid thinning margins and disappointing demand in the peak consumption season.
Steel benchmarks on the Shanghai Futures Exchange were up. The most-active rebar contract gained 1.3%, hot-rolled coil rose 1.1%, wire rod increased 1.9%, and stainless steel was up 0.1%.
Other steelmaking ingredients Dalian coking coal and coke were up 3.17% and 0.2%, respectively.