Commodities

China to strengthen commodity price controls in five-year plan

Credit: REUTERS/DAMIR SAGOLJ

China will strengthen price controls on iron ore, copper, corn and other commodities in its 14th five-year plan for 2021 to 2025 to address abnormal fluctuations in prices, the state planner said on Tuesday.

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BEIJING, May 25 (Reuters) - China will strengthen price controls on iron ore, copper, corn and other commodities in its 14th five-year plan for 2021 to 2025 to address abnormal fluctuations in prices, the state planner said on Tuesday.

China will improve monitoring and forecasting systems for major commodities and strengthen price controls for important goods such as grain, meat, eggs and vegetables, the National Development and Reform Commission (NDRC) said.

It will also stick to the minimum purchase price policy framework for rice and wheat, it said. The government buys these grains from farmers at a minimum price when the market drops below that level.

The move comes as Beijing prioritises guaranteeing food security for its population of 1.4 billion.

The NDRC said it will build a solid grain supply and stabilise prices.

In energy markets, the state planner said China will adopt a new pricing mechanism for pumped storage, and promote price reforms in transmission and distribution of electricity, in order to improve flexibility in the grid system.

"For high-energy intensity and high-emission industries, (China) will implement differential and tiered electricity prices... to promote carbon reduction," the statement said.

Commodities prices in the world's second biggest economy have seen big swings this year driven by post-pandemic demand recovery, global liquidity easing and speculative trading.

Beijing's recent moves come after soaring metals prices contributed to a spike in factory gate prices and slower growth in industrial output in April.

Government watchdogs have repeatedly urged industrial metal firms to maintain market order and pledged to crack down on any irregularities or malicious speculation.

Futures prices for commodities such as iron ore DCIOcv1 and corn DCCcv1 on the Dalian Commodity Exchange, steel SRBcv1SHHCcv1 and copper SCFcv1 on the Shanghai Futures Exchange all hit historic highs this year.

Beijing has vowed more regulation of trade, stockpiling, tougher inspections on physical and derivative markets and probes into behaviour that bid up prices.

Premier Li Keqiang also said on Monday that the government will strive to prevent rising commodity prices being passed on to consumers. (https://bit.ly/3bRYvjc)

(Reporting by Min Zhang, Hallie Gu, Muyu Xu and Shivani Singh; editing by Clarence Fernandez and Jason Neely)

((min.zhang@thomsonreuters.com; (8610) 5669-2105;))

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