The three day winning streak for iron ore — the top performing commodity in 2016 — came to an end on Wednesday, and it looks like there may be further declines to come.
According to Metal Bulletin, the spot price for benchmark 62% fines fell fractionally on Wednesday, slipping 0.08% to $61.70 a tonne, leaving its year to date gain at 41.6%.
While a minuscule decline, that wasn’t the case in Chinese iron ore futures which tumbled in overnight trade.
The most actively traded January 2016 contract on the Dalian Commodities Exchange slumped by 2.96% to 442 yuan, a stark reversal of fortunes earlier in the week.
The decline corresponded with a warning from Morgan Stanley that an upcoming G20 meeting, hosted by the Chinese city of Hangzhou in early September, could lead to a reduction in steel output, lessening demand for iron ore and, as a consequence, heaping pressure on prices.
“Given that China’s construction activity eases over September to October, this event may act as a catalyst for a sell-off,” the bank wrote in a note released earlier this week.
Trade in Dalian will resume from 11am AEST.