Market regulators in Beijing said earlier this week that aluminium and other commodities suppliers should “reasonably” price their sales, and that speculators and stockpilers would face harsh penalties for actions resulting in price spikes.
With prices for aluminium in Shanghai higher than they’ve been in over a decade, the State Administration of Market Regulation said in a statement on Friday that simply because pricing was independent of government control, it did not mean pricing may be arbitrary.
“Business operators set prices based on production and operating costs, and market supply and demand […] but they cannot only emphasise market supply and demand without considering production and operating costs.”
“Companies should follow the principles of fairness, lawfulness, honesty and credibility, and set prices reasonably,” the regulator continued.
SAMR went on to say that pricing strategies and sales practices continue to be subject to state regulation.
Chinese commodities sellers have reported significant bumps in profits over the first two quarters of the year, owing in part to a strong bounce back of demand from 2020’s lows.
However, the regulator said illegal traders and speculators have taken advantage of the situation by hoarding commodities to increase prices even further. SAMR said that this activity was an unnatural disruption to commodities markets prices, and that it would be serious in dealing with such traders.
Beijing has taken a multitude of steps to cool the aluminium market in recent weeks and months, including releasing strategic reserves to increase supply. However it continues to blame bad actors in the market for record high prices.