Iron ore is under pressure as demand fears flare again

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Iron ore spot markets tumbled on Thursday, mirroring an equally large decline in Chinese futures one day earlier.

According to Metal Bulletin, the price for benchmark 62% fines fell 2.9% to $60.88 a tonne, leaving it at a one-week low.

It was also the largest one-day percentage decline since September 22.

The weakness in the benchmark was seen across both lower and higher grades.

The price for 58% fines fell 3.4% to $36.29 a tonne while ore with 65% Fe content dropped 2.7% to $83.50 a tonne.

An ugly session all round, mirroring the performance of futures markets over the past 24 hours.

After falling heavily on Wednesday evening, futures held their losses on Thursday despite the release of strong GDP figures from China during the session.

News that Chinese crude steel output fell to 71.83 million tonnes in September, down from August’s record high of 74.59 tonnes, only added to concern about the outlook for iron ore and coking coal demand as steel production curbs in China begin to kick in.

Sentiment was not helped by data that showed Chinese property sales fell for the first time in over two years, declining 1.5% in September.

The January 2018 iron ore futures contract in Dalian shed 3.4% for the session, closing at 444 yuan. Coking coal and coke futures were hit even harder, slumping 6.4% and 7% respectively to 1,097 yuan and 1,687 yuan.

Rebar futures were also under pressure with the January 2018 contract in Shanghai losing 3.5% to 3,604 yuan.

However, with futures managing to crawl higher overnight, the early indicators suggest that the weakness in spot markets may not persist today.

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

SHFE Rebar ¥3,634 , 0.39%
DCE Iron Ore ¥446.00 , 0.22%
DCE Coking Coal ¥1,116.00 , -0.40%
DCE Coke ¥1,716.50 , -0.15%

Trade will resume at midday AEDT.

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