Spot iron ore offers declined as major Chinese commodities exchanges took steps to calm volatile markets by hiking transaction fees and widening trade limits, industry sources said.
Iron ore and steel futures fell again in reaction to higher trading costs, brought in to deter speculative investors believed to be behind last week's spike in prices and volumes.
The Dalian Commodity Exchange said it would double the transaction fees on steelmaking raw materials coking coal and coke futures from Thursday, the fourth increase in a week.
It later announced that from April 29 it would further widen the trading limit for coking coal and coke futures to a 7% move in either direction from 6%, a step that could potentially reduce trading disruptions.
The exchange also said the minimum margin for both contracts would be increased to 9% from 8% previously.
Dalian had also raised transaction fees on iron ore futures twice this week as the exchange, along with other commodity platforms in Shanghai and Zhengzhou, imposed curbs to restore calm to markets after a week-long surge by unsettled global investors.
Analysts said speculators were betting that a rise in infrastructure spending in China would lift raw material prices, which have been depressed for years by a persistent supply glut.
The rapid price gains have defied the supply-demand balance of the underlying commodities, and analysts warned there was a risk of a bigger correction ahead, similar to last summer's crash in Chinese shares that also followed a rapid run-up.
After raising the transaction fee on iron ore futures contracts twice, the Dalian exchange said it "will step up supervision and resolutely curb signs of overheated speculation in some products to prevent risks and maintain steady operations of markets".
Following are international iron ore prices:
Grade % Fe |
Origin |
Product |
load port |
destination |
Apr 28, 2016: cfr ($/ton) |
Apr 27, 2016: cfr ($/ton) |
Apr 26, 2016: cfr ($/ton) |
Apr 22, 2016: cfr ($/ton) |
63.5/63 |
India |
Fines |
Vizag |
Qingdao |
61 |
63 |
65 |
64 |
62 |
India |
Fines |
FOB Vizag |
|
31 |
33 |
35 |
34 |
62 |
Australia |
PB |
Dampier |
Tianjin |
61 |
63 |
65 |
64 |
63.5 |
Brazil |
Fines |
Brazil |
China |
63 |
65 |
67 |
66 |