Singapore futures fell 8% to $130 ($180) per ton on Thursday, bringing iron ore's loss this week to 17%. It's now down more than 20 percent from its cyclical highs, which is enough for a bear market, according to Westpac. On Friday, March futures were down another 2.2 percent to $128.80 a ton on SGX.
The March contract for Dalian iron ore fell 5.2 percent to Yuan 691 ($151) per tonne.
The latest drop comes after the Chinese state planner and market regulator told some iron ore traders to release excess inventories and reduce inventories to reasonable levels, following a joint investigation in Qingdao, one of the country's largest iron ore ports.
The National Development and Reform Commission (NDRC) and the State Market Regulatory Administration (SAMR) held talks on Thursday, requesting information on inventory, while urging traders to confirm concerns over speculation, including tactics to accumulate or increase prices in the iron ore market.
This was the second meeting of officials this week, marking the regulators' increased efforts to widen their oversight and stabilize prices.
“The inventories of many commodities are critically low, but there is no sign of this in the iron ore markets – on a seasonal basis they are well above normal levels, so I would describe this latest rally as speculative in nature and cannot be justified by the presence of iron ore markets. Robert Rennie, head of research at Westpac,
“There is iron ore in Chinese ports. As regulators start probing miners, brokers and traders, they will see signs of hoarding and speculation, so I continue to expect prices to drop further, targeting $100 to $110 – given the availability of iron, this is where it should trade. ”he spoke.
As prices soared above $150 a tonne last week, Chinese regulators responded by carrying out port controls, removing fees for futures and warning against disinformation.
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