Commodities: China places new curbs on steel-related futures

Commodities came under pressure following a decision by China´s regulators to curb speculative inflows into the country´s futures exchanges and the release of 'bearish' weekly oil inventory data Stateside.

The Dalian Commodity Exchange announced it would hike transaction fees and widen trading limits on coking coal and coal futures starting from April 29. Minimum margin requirements for both contracts were also to be increased.

That sent the most-heavily traded iron ore contract on the Dalian Commodities Exchange, for September, closed 5.4% lower at $66.95 a tonne after having traded limit-down for a second consecutive session after falling by 6%.

Transaction fees for iron ore futures had already been raised twice earlier in the week.

Bloomberg´s commodities index slipped 0.32% to 168.56.

Front month West Texas Intermediate crude oil futures were up by 0.845% to $46.13 per barrel on the NYMEX as of 16:45BST, paring earlier sharp gains.

Commercial US oil inventories Stateside increased by 2.0m barrels in the week ending on 22 April despite a hefty drop in weekly imports, according to the US Department of Energy, edging pasts forecasts calling for a build of 1.7m barrels.

As ever, China was not far from traders´ minds, looming decisively in the outlook from several large-cap stocks such as StanChart.

Precious metals were uniformly higher with the July 2016 COMEX silver contract up 1.08% at $17.30 per troy ounce.

Three-month copper futures ended the session 1.2% lower at $4,883.00 per metric tonne on the LME.

On that note, economists at Capital Economics told clients officials in Asia´s largest economy were more "aware than in the past" of the damage which excessive stimulus could wreck.

The think-tank believed the stimulus which was already in the pipeline would sustain the country´s economic recovery until nearly the end of the year, but were "likely to pull back so that growth stabilises rather than continues to accelerate in 2017."

In a similar vein, commenting on the recent surge in Chinese steel prices analysts at Morgan Stanley said "the recovery will continue for another three to four months before growth moderates from August-September."

Growth in property-related consumption was a more important driver behind Chinese steel prices, accounting for 42% of steel demand versus 25% for infrastructure.

However, during the recent recovery it was the latter that had been largely responsible for higher demand, Morgan Stanley Australia´s analyst team led by Joel Crane said in a research report sent to clients.

Live cattle CME-traded futures for June 2016 were down by 1.22% to $1.17 per pound, while the July 2016 CBoT corn futures contracts was losing 0.65% to $3.8475 per bushel.