China states it will stabilize the commodity market

According to China’s cabinet, it will strengthen its management of commodity supply and demand to curb unreasonable rises in prices and prevent them being passed on to consumers. Remarkably, it urged coal producers to increase output.

Commodities’ prices, including iron ore, copper, coal, and steel, have boosted this year. Notably, China is the world’s largest user of these commodities. The rise was driven by post-lockdown recoveries in demand and easing liquidity globally. However, they extended recent losses after the cabinet’s latest comments.

According to the state broadcast CCTV, China will step up adjustments on the trade and stockpiling of commodities and reinforce inspections on both the spot and futures markets. The report also revealed that it would crack down on malicious trading and investigate behavior that bids up prices.

China also urged coal producers to increase output to meet peak demand in summer. The country’s coal production in April dropped to its lowest since July 2020.

China will keep a stable monetary policy and keep yuan exchange rates steady

Additionally, after the report, thermal coal futures on the Zhengzhou Commodity Exchange fell 7.9%, adding to losses made in the previous five trading days after the cabinet resolved to cope with increasing commodity prices.

In Dalian, prices for steelmaking ingredient iron ore sank by 7.5% after closing down 3.3% in the earlier session.

Another essential thing to mention is that in the Shanghai Futures Exchange, steel rebar and hot-rolled coil plunged about 6%. Meanwhile, base metals such as copper also declined.

Based on the cabinet announcement, the Asian giant, China, will keep a stable monetary policy and keep yuan exchange rates basically steady,  which added that it will help small and micro companies to cope with production and operation difficulties amid increasing prices.

According to the report, the country will implement tax reduction or exemption for small and micro firms, strengthen re-lending, rediscounting, and guide banks to expand credit loans