China will take more steps to curb commodity price speculation and
keep prices stable, showing zero tolerance for illegal activities,
according to the country's top economic regulator. The National Development and Reform Commission, together with other
four central departments, held a meeting on Sunday on the rapid
commodity price gains this year, warning key enterprises in the bulk
commodity sector to maintain normal market order. The talks came after Premier Li Keqiang chaired the State Council's
Executive Meeting on Wednesday, calling for careful analysis of reasons
for the recent spate of rapid commodity prices increases and adopting
measures in a targeted and holistic approach to ensure the supply of
commodities and keep their prices stable. The NDRC meeting said the recent price rally in commodities is driven
partly by the transmission of global price rise and overspeculation has
also pushed up the prices. Key industrial metal enterprises are
required to promote the coordinated development of upstream and
downstream industries and keep the industrial ecology healthy. The meeting said regulators would closely monitor the commodity price
changes and strengthen regulation of both futures and spot markets.
They will also crack down on market violations such as monopolies in
commodities markets and the spread of false information and hoarding. The message caused domestic commodity prices to plunge on Monday,
with the main futures contract for iron ore dropping more than 5 percent
and rebar decreasing nearly 4 percent. The shares of iron and
steel-related companies traded in Shanghai and Shenzhen also dipped 1.73
percent on Monday, according to Shanghai-based information provider
Wind Info. Zhou Maohua, an analyst at China Everbright Bank's financial market
department said, "The government is actively formulating and deploying
policies to ensure supply and price stability of industrial raw
materials, which will help stabilize the market and enterprises'
expectations." Zhou said while the rise in commodity prices has led to an increase
in production costs for Chinese companies in some mid-and downstream
industries, it has had limited effect on the prices of consumer goods. "However, the government still needs to take steps to keep commodity
prices stable. More efforts are needed to increase effective market
supply, crack down on market violations and increase fiscal and
financial support for some badly hit companies with bigger potential." This round of price increases is the result of multiple factors,
especially excessive market speculation, experts said. The government's
latest talks with key enterprises demonstrated its determination to rein
in market irregularities and keep commodity prices stable. Tao Jin, deputy director of the macroeconomic research center of the
Suning Institute of Finance, said the government's continued efforts to
keep prices stable will encourage raw materials enterprises in upstream
industries to increase production. "More effort should be made to increase domestic supplies and
encourage cooperation between Chinese industrial metals enterprise and
overseas entities," Tao said. Wu Chaoming, chief economist at Chasing Securities, said this round
of commodity price increases may reach a high in the third quarter, and
then the price will fluctuate at a high level. To better cope with the situation, enterprises should take measures
such as increasing support for technological innovation, reducing the
use of raw materials, enabling more efficient use of materials and
encouraging the use of alternative materials, Wu added.
|