The problem for the authorities in Beijing is that iron ore prices seem perfectly capable of rallying on actual supply and demand fundamentals.
It's not hard to see why Beijing wants to cool the price of the steel raw material, given the spot price of 62% iron ore for delivery to north China , as assessed by commodity price reporting agency Argus, is once again close to $150 a tonne, having gained some 68% since the 2021 low of $87, hit in mid-November.
While the close on Wednesday of $146.45 a tonne is still some way below the record high of $235.55 in May last year, it's still at a level where China's steel mills will be struggling for profitability and the costs of construction will be rising, putting pressure on both inflation and economic growth.
China's state planner, the National Development and Reform Commission, and the State Administration for Market Regulation recently talked to iron ore price information providers, warning the firms to ensure accuracy of their releases, the regulator said in a statement on Wednesday. read more
The message is Beijing wants to increase market supervision and crack down on speculation, which it blames for driving prices higher.
However, while there may well be some dubious market commentary from small consultancies and pricing services within China, there is plenty of hard evidence that suggests that iron ore's current rally is justified by fundamentals.
China, which buys almost 70% of global seaborne iron ore, has recorded strong imports in January, with Refinitiv estimating arrivals of 94.28 million tonnes, while commodity consultants Kpler are even more bullish, tipping imports of 108.41 million tonnes.
The vessel-tracking and port data doesn't exactly align with official customs data given differences between when cargoes are assessed as having been cleared, but they are strongly correlated overtime.
January's iron ore imports look set to have rebounded from December's official 86.07 million tonnes, but will still be below the 2021 peak of 104.95 million in November.
Nonetheless, January's imports are on track to be the second-strongest in at least five months, indicating that China's steel mills and traders are keen to stock up.
INVENTORIES
Another bullish factor is China's inventories of both iron ore and steel rebar.
Iron ore inventories , as assessed by consultants SteelHome, were 154.05 million tonnes in the week to Jan. 28, continuing a downward trend from the 2021 peak of 157.5 million, reached in mid-December.
Stockpiles are still higher than what they were at this time last year, but the usual seasonal pattern is for inventories to build over winter before being drawn down as the summer construction peak approaches, and this year the drawdown may have started earlier than usual.
Steel rebar stockpiles tell a somewhat different story, standing at 4.92 million tonnes as of Jan. 28, roughly in line with the 4.86 million at the same time in 2021 and the 5.18 million in 2020.
However, the seasonal pattern is for inventories to build strongly as winter ends as mills ramp up output to meet demand for infrastructure and construction projects.
In 2021, rebar inventories jumped from a low of 3.37 million tonnes at the start of the year to a peak of 11.6 million by mid-March, while in 2020 they went from 2.81 million to 13.0 million, also by mid-March.
If the usual pattern is repeated it suggests that steel output is likely to surge in coming weeks as winter pollution restrictions end.
Throw in expectations of increased stimulus measures as Beijing seeks to reach economic growth targets, and it's likely that demand for imported iron ore will remain robust.
Another potential bullish factor is on the supply side, with the cyclone season underway in Western Australia state, home to the bulk of production in the world's biggest iron ore producer.
The Australian Bureau of Meteorology has predicted an average to above average number of cyclones, raising the risks of disruptions to mining and transport operations in Western Australia.
Overall, the hard data on imports and inventories, the likelihood of robust Chinese steel output and the risks of weather-related supply disruptions are enough to keep a bullish tone for iron ore, irrespective of what the authorities in Beijing may desire.