Just as iron ore prices jumped to 26 month highs on Monday at just over $US80 a tonne according to one measure, so they slid back under a day later.
Much of the pressure on iron ore and other commodities emerged from China where futures prices went south yesterday, with steel product futures prices under heavy pressure.
Driving the negativity was the news that the Chinese government is cracking down hard on capital outflows, which is one way commodities trading is being used to shift money in and out of the country.
Ostensibly the crack down is on mergers and acquisitions above $US 1 billion and $US10 billion, depending on the type of deal, the buyer and the sector the investment is proposed for (and no doubt the country).
It is seen as an attempt to restrict big capital outflows, but Chinese investors and analysts say it won’t eb too long before smaller deals and activity is targeted by the government.
So commodity futures went south and the selling hit more established markets offshore.
So one index had iron ore losing 6.4% to $US75.10 a tonne, while the CME futures market (which never had the price reaching the $US80 level) saw its spot price slide 6.7% to $US72.13.
And spot thermal coal prices continue to ease and were trading around $US87.10 to $US92.35 on the ICE platform last night – a fall of between 15% and 17% so far this month.
Gold and oil also fell overnight. Gold fell around $US3.50 to $US1188 an ounce. Oil dropped nearly 4% for Brent and US crude to be around $US45 to $US46 a barrel (see separate story on OPEC).
Comex copper fell 2.4% or 6.5 US cents to $US2.6055 a pound, a big negative given the solid rise the metal has seen this month.
