Dalian and Singapore iron ore futures dropped on Monday, as traders worried about further government intervention in the market after last week’s rally.
Talk in the market that China’s National Development and Reform Commission (NDRC) met with several futures companies in Beijing on Monday to discuss the iron ore market pressured prices, said analysts.
“Market sentiment is adversely affected by concerns over government’s cracking down on speculative activities which was triggered by the news,” said Pei Hao, a Shanghai-based senior analyst from international brokerage firm FIS.
The state planner has already issued several warnings in recent weeks against hoarding and speculation, which it has blamed for rising prices.
The NDRC did not immediately respond to a request for comment on the meeting.
A forecast for rain and a drastic drop in temperature also impacted sentiment with the weather expected to hamper construction and impact downstream steel consumption.
The most-traded May iron ore futures contract on the Dalian Commodity Exchange (DCE) DCIOcv1 ended daytime trading 2.04% lower at 890.5 yuan($129.27) a tonne, the lowest since March 29 following a near 5% jump in the past week.
On the Singapore Exchange, benchmark May iron ore SZZFK3 lost 3.77% to $120.6 a tonne by 0719 GMT, the lowest since March 27 after posting a 5.1% jump last week.
Other steelmaking raw materials – coking coal and coke – similarly weakened, with the former DJMcv1 dropping 3.76% and the latter DCJcv1 losing 3.74%.
Prices of steel futures also showed signs of weakening across the board.
Rebar on the Shanghai Futures Exchange SRBcv1 shed 3.14% to 4,044 yuan a tonne, hot-rolled coil SHHCcv1 dropped 2.7%, wire rod SWRcv1 tumbled 3.41%. Stainless steel SHSScv1 was little changed, though.