It looks like the iron ore rout is over, for now

Richard Heathcote/Getty Images

After days of relentless selling pressure, coinciding with the longest losing streak since 2015, it looks like the rout in iron ore markets is over.

For now at least.

Here’s the scoreboard at the mid-session break on Wednesday.

SHFE Rebar ¥3,736 , 0.65%
DCE Iron Ore ¥489.00 , 1.88%
DCE Coking Coal ¥1,276.00 , 1.19%
DCE Coke ¥2,014.50 , 0.73%

After falling to as low as 478.5 yuan a tonne earlier in the session, iron ore futures in Dalian have reversed hard in recent trade, encouraged by the release of strong industrial output and fixed asset investment from China in early 2018.

The May 2018 contract currently trades at 489 yuan a tonne.

Coking coal and coke contracts have also reversed earlier losses, sitting at 1,276 yuan and 2,014 yuan a tonne respectively having fallen to 1,243 yuan and 1,960 yuan earlier in the session.

News that Chinese crude steel output rose 5.9% in the first two months of the year compared to the same period in 2017 appear to have encouraged buyers to return to the market, helping to dispel growing concerns about the outlook for demand.

Rebar futures traded separately in Shanghai have also pushed higher, sitting at 3,736 yuan, up from 3,657 yuan earlier in the day.

While high steel inventory levels have weighed on prices in recent weeks, news that Chinese real estate investment grew by 9.9% from a year earlier between January and February may also be helping to improve sentiment.

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