Chinese iron ore futures were pummelled Thursday evening, setting up the prospect for a nasty session for spot markets on Friday.
According to pricing from Thomson Reuters, the most actively traded September 2017 iron ore contract on the Dalian Commodities Exchange tumbled 5.4% to 534.5 yuan a tonne, the lowest level since January 10.
That mirrored an equally ugly 4.3% drop in rebar futures traded desperately on the Shanghai Futures Exchange.
Movements in the latter tend to lead those in the former.
Here’s how the final overnight scoreboard ended up.
SHFE Rebar ¥3,100 , -4.29%
DCE Iron Ore ¥534.50 , -5.40%
DCE Coking Coal ¥1,299.00 , -2.70%
DCE Coke ¥1,848.50 , -2.76%
The sharp plunge in rebar futures was an continuation of the price action witnessed on Thursday, said analysts at Metal Bulletin.
“China’s spot rebar prices fell on Thursday as the softening paper market put some pressure on market sentiment,” the group said.
“The retreat in the paper market dampened buying interest in the spot market. As a result, trading was very thin in both the eastern and northern Chinese regions.”
On Thursday, the spot price for benchmark 62% iron ore fines fell by 0.76% to $80.92 a tonne, partially reversing the 2.63% gain of the previous session.
Should the decline in iron ore futures be sustained when trade gets underway at 11am AEST, it points to the likelihood of an even largest fall being registered in spot market today.