China is about to release a property report that could influence iron ore markets

Cancan Chu/Getty Images
  • Iron ore sport markets rose modestly on Tuesday, partially reversing losses seen on Monday.
  • Chinese iron ore and rebar futures jumped in overnight trade, pointing to the likelihood of early strength in spot markets.
  • China will release new home price data today, a report that has influenced iron ore markets in the past.

Iron ore spot markets edged higher on Tuesday, continuing the choppy price seen throughout the month of April.

According to Metal Bulletin, the price for benchmark 62% fines rose 0.9% to $64.51 a tonne, partially reversing some of Monday’s 1.6% slide.

It has oscillated in a thin range between $63.12 to $65.30 since March 28.

As is so often the case, the movement in the benchmark was reflected across the grades.

58% fines added 0.4%, closing the session at $37.72 a tonne. 65% fines fared a little better, rising 1.2% to $82 a tonne.

The modest reversal followed a similar move in Chinese futures earlier in the session.

Rebar futures in Shanghai finished at 3,384 yuan, above Monday’s night session close of 3,357 yuan a tonne. Iron ore futures in Dalian were relatively unchanged, settling at 439 yuan, 0.5 yuan higher than the prior sessions close.

Both contracts had traded higher earlier in the day.

The small bounce in rebar futures followed the release of major Chinese economic data, including steel production and property investment figures for March.

According to data from China’s National Bureau of Statistics (NBS), Chinese crude steel output stood at 73.98 million tonnes in March, up 4.5% from 12 months earlier.

Average steel output rose to 2.39 million tonnes per day, according to calculations from Reuters, the highest level seen since September.

Property investment, the largest source of steel demand in China, also provided some support, increasing at the fastest annual rate in three years in the first quarter of the year.

The NBS said investment grew by 10.4% from a year earlier, the strongest result since the March quarter of 2015.

However, sales by floor area grew by a smaller 3.6% last quarter compared to same period a year earlier, down from 4.1% in the first two months of the year.

“Should property sales continue to slow, and with what appears to be an adequate supply of steel, the dynamics in the near term for iron ore remain weak,” said analysts at RBC Capital Markets in response to the sales slowdown.

While Chinese futures stuttered their way into the close on Tuesday, there was no hint of that indecisiveness in overnight trade with both rebar and iron ore futures pushing significantly higher.

Here’s the scoreboard.

SHFE Rebar ¥3,442 , 1.56%
DCE Iron Ore ¥446.00 , 1.36%

Based on this price action — which has not been the best lead indicator of late — it suggests spot markets may continue to push higher today.

Trade in Chinese commodity futures will resume at 11am AEST, 30 minutes before China’s NBS release new house price data for March.

Weakness in this report in February contributed to a sizable fall in both spot and futures markets at the time, hinting that it may well prove influential again during Wednesday’s trading session.

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