FX.co ★ Iron Ore Rallies as China Clamps Down on Price Wars

Iron ore futures climbed to approximately CNY 736 per tonne on Friday, reaching a seven-week peak as China ramped up its efforts to mitigate aggressive price competition and alleviate deflationary pressures. This week, the Central Financial and Economic Affairs Commission advocated for tighter controls over excessive price reductions among companies. This strategy is perceived as a crucial measure to bolster China’s beleaguered steel sector, which continues to struggle with low profit margins and ongoing overcapacity issues. Supporting the positive market momentum, shipments from major exporters, including Australia and Brazil, have been on a downward trend. Recent figures indicate that leading producers such as Rio Tinto, BHP, Fortescue, and Vale have all experienced month-over-month declines in export volumes. Nevertheless, the upward trajectory was restrained by emerging signs of dwindling demand, particularly attributed to environmental measures and production limits in Tangshan, China’s foremost steel-producing city.