(Bloomberg) -- Iron ore futures tumbled as China’s top steel-making hub ramped up efforts to control a dizzying surge in prices.
Futures in Dalian dropped the daily limit, while prices in Singapore extended a slump from a record $233.75 a ton on Wednesday amid concerns about the sustainability of the rally. In the latest move aimed at containing prices, the steel-making hub of Tangshan banned steelmakers from fabricating or spreading price-hike information. That follows comments from Chinese Premier Li Keqiang this week about the need to deal with surging commodity costs.
The local government of Tangshan vowed to punish violations including price manipulation, and steelmakers were told Friday that they may be suspended from doing business or have their licenses revoked if they break the law. The city, which accounts for 14% of China’s steel output, has been at the center of an industry overhaul as authorities implemented a slew of output restrictions to control emissions.
Iron ore Futures in Singapore fell 8.7% to $192.55 a ton at 1:37 p.m. local time, heading for the first weekly decline in seven. Contracts in Dalian traded 5.6% lower, extending Thursday’s 9% decline.
“Prices have already reached a peak level from a medium- and long-term perspective,” Huatai Futures Co. wrote in a note. “Demand for iron ore may soften when output restrictions are implemented under the environmental push.”
Separately, China said it will accelerate the transformation of the power, steel, non-ferrous metal and petrochemical industries to cut emissions, adding that it’s targeting seven provinces that saw increasing energy use in the first quarter.
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