Iron ore fell back below $200 a ton as China intensified efforts to rein in surging raw material prices, while growing concerns about inflation sparked a broad retreat across energy and commodity markets.
Traders were spooked after China’s cabinet Wednesday called for tougher oversight of commodity markets and protection for consumers from soaring prices. Markets fell under the weight of inflation fears and concerns about the global economic recovery, threatening a rally that drove raw materials to a nine-year high last week.
“High commodity prices are now a concern for China and steel production controls seem likely to come later this year,” Citigroup Inc. analysts including Paul McTaggart said in a May 19 note.
Futures in Singapore fell 4.4% to $197.25 a ton by 7:56 a.m. local time, having earlier dropped as much as 6.7%. The market hit a record $233.75 earlier this month.
Iron ore has rocketed amid booming steel markets in China and the recovery in global steel demand. But increased government pressure and concerns about a global recovery have seen more trading volatility. Last week futures in Dalian and Singapore tumble as the world’s biggest iron ore buyer rolled out more measures to temper recent gains.
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