Metal prices slump on China state firms warningEuropost
The global prices of industrial metals dipped as Chinese official state authorities issued a warning, directed to state firms, with a call to stop the aggressive buyer approach, BBC reported. As China is the biggest consumer of metals, the warning helped sinking the prices on all markets. China's National Development and Reform Commission (NDRC) urged the firms to maintain "normal market orders". The move comes after metal prices have surged in recent months as major economies emerge from the pandemic.
On London Metal Exchange, copper immediately dropped by 1.6% after the announcement, while aluminium slipped by 1.09%. According to a report by state media outlet The Global Times, key Chinese companies in steel, iron and aluminium were among those "collectively summoned" for interviews. The Global Times also quoted a statement by the NDRC saying the meeting was held due to the continuous and drastic increase of a handful of commodities. China already announced that it would step up measures around commodity supply, saying it would curb "unreasonable" prices. Commodity traders are also cautious after The White House said that it had cut back its infrastructure bill from $2.25tn to $1.7tn. With cuts to the spending plan being in broadband, roads and bridges demand for iron ore and copper could be curbed.
Global prices for many of the raw materials needed for industries - including copper, coal, steel and iron ore - have risen sharply this year as lockdowns and other measures to curb the spread of Covid-19 have been eased. Huge economic stimulus measures by governments and central banks across the world have also driven up demand for commodities.