China-Australia tensions ratchet up unease in Beijing about surging iron ore prices

China may step up efforts to reduce steel demand as authorities and industry groups grow increasingly uneasy about high iron ore prices amid a trade dispute with its biggest supplier Australia, according to analysts.

China’s state-dominated steel sector, represented by China Iron and Steel Association (CISA), has been sounding the alarm about surging prices, urging the central government last week to help with market “malfunctions” and improve policies in the futures market.

“I don’t think the high iron ore price is a factor in the trade dispute between the two countries, but it’s probably not helping,” said Shane Oliver, chief economist at investment manager AMP Capital. “Not that there is much that can be done about it in the short-term beyond moving back away from using market forces to determine the price.”