Chinese regulator tells businesses to set commodity prices 'reasonably'

[BEIJING] China's market regulator said on Friday companies should set bulk commodity prices "reasonably" and vowed to come down hard on hoarders and speculators it accused of being behind a renewed rise in raw material costs.

China's factory gate inflation hit a 13-year peak in August as high costs put more pressure on manufacturers in the world's second-largest economy.

Prices for metallurgical coal rose to a record high this week, while Shanghai aluminium hit a 13-year peak.

Government controls have been lifted over most commodity prices in China, with producers and trading houses in the country pricing their commodity transactions with customers privately, using market rates as a guide.

The State Administration of Market Regulation said in a statement that some companies mistakenly believe independent pricing means arbitrary pricing.

"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," it said.

Several major Chinese commodity producers reported bumper profits in the first two quarters of this year as prices rose due to a rebound in demand from a coronavirus-affected 2020.

"Companies should follow the principles of fairness, lawfulness, honesty and credibility, and set prices reasonably,"the administration said, adding that all pricing strategies and methods were subject to regulatory scrutiny.

Meanwhile some illegal traders and groups with "hot", or speculative, money have "snapped up and hoarded" commodities with malicious intent, driving up prices, the administration added.

It said such action seriously disrupted market order and was not conducive to economic recovery, with the impact on small and medium-sized businesses particularly strong, and pledged to"deal with this seriously".

China, the world's biggest importer of most major commodities, has repeatedly blamed hoarders and speculators for high prices this year and taken steps to try to cool the rally, including launching probes into pricing and trading, and releasing state reserves.

REUTERS