Iron ore prices fell more than 6% Tuesday after China’s Dalian Commodity Exchange tightened trading rules in an effort to take some of the speculative heat out of the best performing commodity of the year.
The Exchange said limits on the opening of positions would be restricted to 2,000 lots a day for non-brokerage members or clients. That’s for both long or short futures contractslong or short futures contracts.
The new rules will apply to all iron ore futures contracts from Tuesday, December 22, the Exchange said in a statement on Monday night.
It came after futures prices had jumped $US15 a tonne, which in turn helped push the physical price for 62% fines delivered to northern China to a new 9 year high of $US176.45. The price of 65% fines surged to top $US190 a tonne.
The Exchange proposed cutting some trading position limits by more than half for its iron ore futures “to strengthen the risk management”.
Tuesday trading with the new limits in place saw the price of 62% fines slump 6.7% to a still high $US164.53. The price of 65% fell 6.2% to $US178.70 a tonne.
The move on December 3 of a trading limit for the most-active May iron ore contract had no impact and the price had jumped more than 20% to Monday’s peak.
Dalian iron ore for May delivery ended daytime trading down 4.8% at 1,055 yuan ($US161.04) a tonne on Tuesday, after five straight sessions of gains.
The January iron ore contract on the Singapore Exchange slumped 6.9% to $US163.88 a tonne on Tuesday, after a record high of $US176.20 a tonne the day before.
