Iron ore bounced strongly at the end of last week

Photo by Mark Wilson/Getty Images

Iron ore spot markets rebounded strongly on Friday with higher grades outperforming lower grades during the session.

According to Metal Bulletin, the price for benchmark 62% fines bounced 1.36% to $62.80 a tonne, recovering part of the 2.1% decline reported on Thursday.

Brazilian ore with 65% Fe content rose by a stronger 2.16% to $80.50 a tonne, masking weakness in lower grades, which fell. The price for 58% fines slid 1.8% to $43.38 a tonne.

Metal Bulletin said the mixed performance followed a quiet session in Chinese steel markets.

“China’s spot rebar prices fell on Friday in quiet trading on lower billet charges,” the group said. “Meanwhile, futures were weak for most of the trading day before pushing above Thursday’s closing prices in the last 30 minutes of the session.”

The late rally in rebar futures may explain the strength in mid- and higher-grade ores during the session.

According to the Commonwealth Bank, a shortage of more efficient high-grade iron ore has been one factor underpinning a recent rally in prices.

The move also followed the release of shipping figures from Port Hedland in Australia, the world’s largest iron ore loading terminal, which revealed exports fell modestly in June.

According to data released by the Pilbara Ports Authority (PPA), exports totalled 43.085 million tonnes for the month, down from 44.076 million tonnes in May.

Compared to a year earlier, exports rose by 3.1%, leaving cumulative iron ore shipments over the financial year at a mammoth 494.6 million tonnes, the highest level on record.

That was up 9% on the amount shipped in the prior financial year.

Data from Shanghai Steelhome released during the session also revealed that Chinese iron ore port inventories fell modestly last week after hitting a record high level in late June, coming in 140.3 million tonnes, a decrease of 1.15 million tonnes.

Exports to China fell to 36.6 million tonnes, down from 38 million tonnes in May. From a year earlier that still represented an increase of 6%.

Providing little certainty as to what direction spot markets will move on Monday, Chinese iron ore and rebar futures finished relatively unchanged from Friday’s day session close on Friday evening.

Dalian iron ore closed up 1.16% at 478 yuan, having hit 485 yuan earlier in the day, while rebar futures in Shanghai finished up 1% at 3,421 yuan, almost unchanged from Friday’s day session close.

Chinese commodity futures will resume trade at 11am AEST, 30 minutes before the release of Chinese producer price inflation data for June.

Factory gate prices are expected to have risen 5.5% from a year earlier, unchanged from the increase reported in the 12 months to May.

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