Iron ore spot markets continue to slide, falling for a third consecutive session on Tuesday.
According to Metal Bulletin, the price for benchmark 62% fines fell by a further 1.4% to $73.68 a tonne, extending its decline from Thursday last week to 3.9%.
The decline trimmed its advance from June 13 to 38.1%, leaving it down 6.6% year-to-date.
The weakness in the benchmark price was replicated across both higher and lower grades.
Ore with 65% Fe content fell by 1% to $93.10 a tonne, while the price for 58% fine fell by a larger 1.4% to $49.02 a tonne.
The losses coincided with anther sharp slide in rebar futures during Tuesday’s day session.
The January 2018 contract on the Shanghai Futures Exchange slid by 2.29% to 3,747 yuan per tonne, extend its losses over the past four sessions to 6.7%.
Higher Chinese steel mill margins, encouraging firms to increase output to meet strong demand, was widely cited as a supportive factor for iron ore prices over the past two months. With steel prices now starting to fall, iron ore is now following suit.
Last Friday, the Shanghai Futures Exchange announced a series of measures to reduce speculative activity in rebar futures, stating that higher transaction fees and reduced trading limits for some client types would begin on Tuesday.
That followed a warning from the China Iron and Steel Association (CISA) a day earlier that recent gains in steel prices were “not driven by market demand or reduced market supply”.
Combined, it helps to explain the recent pullback in rebar futures, partially reversing the 50% rally seen from early June to mid-August.
And that trend continued in overnight trade, with rebar and iron ore futures contracts continuing to edge lower.
SHFE Rebar ¥3,724 , -0.59%
DCE Iron Ore ¥524.50 , -0.19%
DCE Coking Coal ¥1,342.00 , 2.76%
DCE Coke ¥2,114.00 , 0.86%
The weakness suggests that there may be further declines to come for spot iron ore markets today.
Trade in Chinese commodity futures will resume at 11am AEST.