Iron ore extends pullback from two-year high as China tightens trading rules

|By:, SA News Editor

Iron ore prices fell today by the most since March, extending a retreat from a two-year high, as China’s exchanges lowered the daily trading limit and raised margin requirements in a bid to clamp down on speculation.

Ore with 62% content delivered to Qingdao fell 6.8% to $72.08/ton after hitting $80.83 on Monday, the highest since October 2014 and culminating a 65% YTD surge.

Despite the steps to tighten trading rules, "the basics that are driving that speculation - the search for higher yielding assets and the desire to hold U.S. dollars at a time for a weaker yuan - have not changed,” says Westpac Banking economist Justin Smirk. “As such, we would expect to see significant volatility for some time.

Relevant tickers: BHP, RIO, VALE, OTCQX:FSUMF.