Benchmark iron ore futures on China's Dalian Commodity Exchange jumped for the fifth straight week and soared nearly 10% on Friday to break above 1,000 yuan ($152.88) per tonne for the first time ever.
While steel demand has surged in China as the economy quickly recovers from the coronavirus crisis, the industry group and traders say there are signs that speculators are now jumping in and adding fuel to the rally.[IRONORE/]
"Current surging iron ore prices have deviated from the supply and demand fundamentals, largely exceeded mills' expectations and there's obvious signs of capital speculation," the China Iron and Steel Association (CISA) said in a statement, citing major steel producers at a symposium on Thursday afternoon.
Steel firms which attended the symposium included China Baowu Steel Group, Shagang Group, Beijing Shougang, HBIS, Valin Steel and Jianlong Steel.
The steelmakers have asked for a strict crackdown on possible violations of laws and regulations, the CISA said, adding that current iron ore market pricing mechanism has failed.
The significant increase in iron ore prices has eroded the economic performance China achieved after the coronavirus pandemic, according to the steel body.
"Losses in the steel sector are expected to widen. It's not good for the stability of industry chain and supply chain and will seriously weaken Chinese manufacturing's international competitiveness," said the CISA.
($1 = 6.5411 Chinese yuan renminbi)
(Reporting by Min Zhang and Shivani Singh; Editing by Kim Coghill)
By Min Zhang and Shivani Singh