IRON ore futures in China fell almost 3 percent Friday after the Dalian Commodity Exchange moved to rein in high volatility in ore futures trading a day earlier.

    The most-traded May iron ore contract on the Dalian exchange slid 2.6 percent to close at 427 yuan (US$66) a ton after the exchange removed a 50 percent discount on trading fees for one transaction type.

    The steps are aimed at preventing huge price swings accompanied by high turnover that has occurred in the Dalian iron ore futures recently, the exchange said Thursday.

    The 50 percent discount on trading fees when opening and closing positions in the same iron ore futures contract within one day will be removed starting today.

    The exchange will intensify a crackdown on illegal trading to limit risk and stabilize the market. It will also strengthen monitoring on abnormal trading actions and transactions by affiliated accounts.

    The rapid rise in Dalian iron ore futures last week helped fuel a historic 19.5 percent rally last Monday in spot iron ore prices that many thought was largely driven by speculative buying given there have been no significant changes in supply-demand fundamentals.

    The May iron ore contract on the Dalian exchange hit a series of trading limits last week, prompting the bourse to raise the daily trading limit and margins for iron ore futures since Wednesday’s settlement.

    The volume of iron ore futures traded on Dalian on Thursday hit 10,458,552 contracts. That number, which is double counted, translates to nearly 523 million tons of iron ore, or more than half of China’s total iron ore imports last year. (SD-Agencies)