Iron ore has been hit for six

Photo by Tom Shaw/Getty Images

Following the lead provided by Chinese futures on Wednesday evening, the iron ore price was hammered on Thursday, closing at a fresh two-month low.

According to Metal Bulletin, the spot price for benchmark 62% fines plunged by 5.83% to $53.47 a tonne, leaving the price at the lowest level seen since March 15.

It was the largest percentage decline since April 22, and trimmed iron ore’s year to date gain to 22.7%.

Strangely, and hinting that speculative movements in futures markets continue to influence trade in physical markets, the sharp decline came despite no major movement in Chinese steel prices, often seen as a lead indicator for movements in iron ore.

In overnight trade the most actively traded September 2016 iron ore futures contract on the Dalian Commodities Exchange rose by 1.49% to 375.5 yuan, taking back a large chunk of the losses it recorded during Thursday’s session.

Given the relationship between futures and the physical markets of late, it suggests that the decline in the spot price seen on Thursday may be partially reversed should the gains in futures be maintained on Friday.

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