Iron ore hits a 2-week high

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  • Iron ore spot markets finished mixed on Monday as mid- and higher grades outperformed lower grades during the session.
  • Chinese futures were also mixed on Monday with weakness in rebar futures not translating to softer prices for iron ore, coking coal or coke.
  • That theme continued in overnight trade in commodity futures.

Iron ore spot markets finished mixed on Monday as mid- and higher grades outperformed lower grades during the session.

According to Metal Bulletin, the price for benchmark 62% fines jumped 1.5% to $67.26 a tonne, leaving it at the highest level since April 24.

Higher grades also pushed higher with the price for 65% fines adding 0.5% to settle at $85.30 a tonne.

Lower grades, however, weakened with 58% fines losing 0.1% to settle at $39.56 a tonne.

The mixed performance followed a reversal in Chinese steel prices earlier in the session.

The October 2018 rebar contract in Shanghai closed down 0.2% at 3,657 yuan, giving up gains achieved earlier in the day.

The reversal came despite renewed signs that Chinese steel demand is strengthening.

According to Reuters, citing information from Mysteel consultancy, the utilisation rate at Chinese steel mills rose to 68.92% last week, up 1.24 percentage points from the previous week.

It was the highest since mid-November.

Despite a pick-up in capacity, rebar inventories held by Chinese traders fell over the same period, declining by 420,000 tonnes to 6.705 million tonnes, according to separate data from Mysteel consultancy.

While the news had little effect on rebar futures, it helped to boost its raw ingredients, including iron ore.

The September 2018 iron ore contract in Dalian rose 0.2% to 470 yuan, outpaced by gains of 2% and 3.8% respectively for coke and coking coal futures on Monday.

The lift in iron ore futures came despite news that Chinese port inventories rose by 1.08 million tonnes last week to 160.16 million tonnes, the first increase seen in over a month.

The unusual divergence between rebar and iron ore futures continued in overnight trade.

Here’s the final scoreboard from Monday’s night session.

SHFE Rebar ¥3,651 , -0.08%
DCE Iron Ore ¥472.00 , 0.75%

Trade in Chinese futures will resume at 11am AEST.

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