FOCUS: China's ‘unwritten rules’ driving policy changes in commodities

China's new trend of setting out unwritten rules for its commodities industries and communicating them verbally will be a key method to watch out for in the future, market sources told Fastmarkets.

“Unofficial communications to steel mills are increasingly [coming] via provincial and township authorities [and are], not written out clearly as announcements,” an iron ore trader in eastern China told Fastmarkets.
This has caused volatility in ferrous metals markets, particularly in iron ore and steel, where price directions and volatility hinge heavily on sentiment.
“This is very apparent when a lot of the unwritten rules are about demand and supply fundamentals, such as cutting steel production in Anhui, Gansu, Shanxi, Shandong and Jiangsu,” a steel trader in eastern China told Fastmarkets this week.
A major Chinese steel mill in Shandong has not received any official documents requiring it to cut production, but it is still likely to reduce output.

“The steel mill's output in the first half of the year was slightly higher than the same period last year, so it is likely to cut production slightly in the second half of...

Published

Jessica Zong

Paul Lim

Alex Theo

Zihao Yu

Zihuan Pan

July 07, 2021

13:20 GMT

Singapore, Shanghai