Chinese iron ore futures are getting smoked

PATRICIA DE MELO MOREIRA / AFP / Getty Images

Iron ore spot markets rebounded on Friday after several days of losses.

However, with iron ore futures tumbling on Friday evening, it’s debatable whether the strength will continue today.

According to Metal Bulletin, the price for benchmark 62% fines rose by 2.1% to $78.77 a tonne, rebounding strongly after three days of heavy losses.

The strength in the benchmark price flowed through to both higher and lower grade ores on Friday, albeit by a smaller margin.

Ore with 65% Fe content rose by 0.7% to $100.70 a tonne while 58% fines added 0.65% to $50.01 a tonne.

Metal Bulletin said the rebound in spot markets coincided with renewed strength in Chinese steel markets earlier in the session.

“China’s spot rebar prices started rising again on Friday amid gains in the futures market, though there were not many takers at the new levels,” the group said. “Traders in the spot market raised their prices upon seeing the uptrend in the futures market.”

The January 2018 rebar future contract on the Shanghai Futures Exchange closed Friday’s day session up 2.7% at 3,930 yuan per tonne. Iron ore futures on the Dalian Commodities Exchange also ticked higher, rising 0.3% to 585.5 yuan per tonne having briefly climbed above the 600 yuan per tonne level earlier in the session.

However, those moves were unwound during Friday’s night session, casting doubt as to whether the rebound in spot rebar and iron ore futures will continue on Monday.

Here’s the final scoreboard.

SHFE Rebar ¥3,898 , -0.71%
DCE Iron Ore ¥559.00 , -5.09%
DCE Coking Coal ¥1,452.50 , -3.55%
DCE Coke ¥2,425.00 , -1.10%

Iron ore futures, in particular, were hit hard, losing 5.1% to 559 yuan per tonne. Rebar futures fell by a smaller amount, losing 0.7% to 3,898 yuan per tonne.

Trade in Chinese commodity futures will resume at 11am AEST.

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