It’s getting ugly for Chinese coal and iron ore futures.
They’ve been smoked upon the resumption of trade on Thursday, adding the losses seen during Wednesday’s night session.
Here’s the scoreboard as at 75 minutes into trade.
SHFE Rebar ¥3,599 , -1.23%
DCE Iron Ore ¥453.00 , -3.10%
DCE Coking Coal ¥1,130.50 , -3.21%
DCE Coke ¥1,909.50 , -4.36%
Not the best of starts, right?
The January 2018 iron ore contract in Dalian has fallen to the lowest level since mid-July, breaking below lows struck earlier this week.
While that suggests an element of technical selling, Viveh Dhar, mining and energy commodities analyst at the Commonwealth Bank, says iron ore is getting pressured by continued concerns on the outlook for demand.
“Impending steel output cuts in China are weighing on the iron ore demand outlook,” he says. “Market participants also note that iron ore restocking demand will likely wane as steel production comes under pressure.”
Chinese authorities will soon implement curbs on Chinese steel production, driven by attempts to improve air quality in northern provinces during winter months.
As another major steel input, that likely explains the size of the selloff seen in Chinese coking coal and coke futures seen on Thursday, continuing the move seen in recent weeks.