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China and iron ore – the latest regulator concerns

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China is continuing to investigate and tighten regulations on iron ore trading.

  • China’s state planner, the National Development and Reform Commission (NDRC), has taken the lead. Its jointly investigating, with the State Administration for Market Regulation, trading on the iron ore spot market, will tighten rules on what it calls hoarding and speculation.
  • will “strictly punish and disclose” irregularities such as hyping prices and hoarding,
  • will maintain good market order
Info comes via Reuters, more at that link. 

Strong iron ore prices is supportive of the AUD, although its been hard to disentangle the impact amongst developments at the FOMC, especially since last week’s meeting. 

UBS expect the iron ore price to fall:

  • Near-term risks for the commodity complex are increasing with the Fed turning more hawkish & China taking action to deflate commodities (eg by selling strategic base metal reserves)
  • we expect this to accelerate the unwinding of the ‘reflation trade’

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