Iron ore futures fell on Wednesday after hitting record highs Tuesday on expectations of price controls and steel output curbs in China.
The China Iron and Steel Association said on Tuesday that fast-rising iron ore prices are “unreasonable”, that the industry should enhance the exploitation of resources both at home and abroad, and also improve rules for the futures market.
Meanwhile, the country’s environment ministry pledged it would dispatch specific panels to the ferrous sector and strengthen supervision and support, an official said in a briefing on Wednesday, without mentioning which mills or what places they would visit.
Benchmark 62% Fe fines imported into Northern China (CFR Qingdao) were changing hands for $192.52 a tonne on Wednesday, down 1.42% from the previous day, according to Fastmarkets MB.
The most traded iron ore futures on the Dalian Commodity Exchange, for September delivery, ended down 1% at 1,139 yuan ($175.59) a tonne.
“Iron ore prices rose on restocking demand before the Labour Day holiday period … also increased on elevated steel margins in China,” analysts with Commonwealth Bank commodities wrote in a note.
China slapped steel exporters with higher taxes on a range of products as authorities ramp up efforts to cut output and clean up one of the biggest carbon emitters.
Rebates on export taxes for some goods will be removed, and tariffs on some products raised starting May 1, the Ministry of Finance said on its website. Import fees on pig iron, semi-finished, and scrap steel will also be dropped.
The measures highlight an increased focus on servicing the domestic market.
While the tax changes may have some cooling effect on domestic prices, investors “remain very confident” about a tight Chinese steel market, analyst Lin Lin at CRU Group told Bloomberg.
The tax changes will “reduce import costs, expand the import of steel resources and support the reduction of domestic crude steel output,” the ministry said.
(With files from Reuters and Bloomberg)