Iron ore has been hammered again

Getty ImagesBit like the Dons.
  • Iron ore spot markets fell heavily on Monday, logging the largest decline in close to two months.
  • Chinese iron ore and rebar futures were also under pressure, driven by concerns about the outlook for Chinese steel demand.
  • Futures managed to eke out small gains overnight, suggesting that spot markets may stabilise today.

Iron ore spot markets fell heavily again on Monday, logging the largest decline in close to two months.

According to Metal Bulletin, the price for benchmark 62% fines tumbled 2.4% to $65.30 a tonne, the largest percentage decline since April 3.

It’s fallen 5.3% over the past week, leaving it at the lowest level since mid-April.

Smaller losses were recorded across lower and higher grades on Monday.

The price of 58% fines slipped 1.5% to $38.82 a tonne. Meanwhile, 65% fines from Brazil fared a little worse, falling 2% to $84.10 a tonne.

Rather than being inspired by an apparent thawing in US and Chinese relations following positive trade negotiations concluded over the weekend, something that helped to lift sentiment in other asset classes, iron ore markets were more concerned about the outlook for Chinese steel demand.

“Futures on the Dalian Exchange fell in line with losses in steel markets, as reports emerged that steel mills may postpone purchases of iron ore due to uncertainty in downstream demand,” said analysts at ANZ Bank, referring to a sharp slide in rebar and iron ore contracts on Friday evening.

Not even news that Chinese rebar and iron ore inventories continued to fall last week could lift sentiment on Monday with futures remaining deep in the red throughout the session.

Dalian iron ore finished down 3.2% at 465 yuan, bouncing slightly having hit a two-week low of 462 yuan earlier in the day.

Shanghai rebar also finished deep in the red, last trading at 3,589 yuan, down 1.8% from Friday’s day session close.

As seen in the scoreboard below, both iron ore and rebar managed to crawl higher during Monday’s night session.

SHFE Rebar ¥3,606 , -0.22%
DCE Iron Ore ¥466.50 , -0.32%

The modest recovery hints that spot markets may stabilise today, at least in early stages.

All Chinese commodity futures will resume trade at 11am AEST.

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