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After the insane rise on Monday, the iron ore rally has taken a breather

Photo by China Photos/Getty Images

Iron ore followed up its most exciting session ever with one of its most boring on Tuesday.

According to Metal Bulletin, the price for benchmark 62% fines fell by 0.17%, or 11 cents, to $63.63 a tonne, trimming its year-to-date gain to only 46%.

Following Monday’s record breaking $9.99 surge, it was always going to be a tough act to follow.

“After the surge in prices yesterday and the huge volumes traded in the spot market, today was very quiet,” said Metal Bulletin. “Offers actually fell through the day suggesting prices may continue to move lower in the short term.”

While the benchmark spot price has surged in recent months, taking gains from the all-time low on December 11 last year to 66.1%, investors – inside China and out – are betting on the price falling in the months ahead.

The chart below shows two curves: that for Dalian iron ore futures along with iron ore swaps priced out of Singapore. Whether priced in US dollars or yuan, both suggest that the recent jump, potentially fuelled by a flower show of all things, won’t be sustained beyond the short-term.

Outside of market movements, China’s customs department released updated iron ore import data on Tuesday, revealing that demand fell for a third straight month in February.

Despite recent weakness, the nation imported 962.6 million tonnes of ore over the past year to February, the largest 12-month total on record.

At 73.61 million tonnes, the February figure was up 8.3% on 12 months earlier – no mean feat given supply disruptions from Brazil and Australia during that month, along with the timing of the Lunar New Year holiday.

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