Iron ore made it six declines on the trot on Wednesday, extending its decline from July 12 to over 6%.
According to Metal Bulletin, the spot price for benchmark 62% fines slide by a further 0.48% to $55.75 a tonne. The declines for lower grade ore was even steeper with the price for 58% fines falling by 1.13% to $43.70 a tonne.
While it’s been a lengthy losing streak, the 6.1% decline has only seen the price retrace to levels seen on July 11, largely due to the enormous 6.65% gain recorded on July 12.
Analysts at Metal Bulletin note that the decline in physical iron ore markets corresponded with an unexpected slowdown in Chinese steel production.
“CISA [China Iron and Steel Association] have announced that member mills lowered their crude steel production rates in early July again after a rebound in late June,” says Metal Bulletin.
“CISA members produced crude steel at an average rate of 1.704 million tonnes per day during the first 10 days of the month, down 2% from the last 10 days of June. The drop in production was reportedly unexpected, as steel prices had been rising over the period.”
The slowdown in output corresponded with an increase in steel inventories, explains Metal Bulletin.
“As at July 10, CISA member mills had a total of 13.8 million tonnes of finished steel in their inventories, up 4.3% from June 30 levels, the association’s data shows.”
Suggesting that the losing streak for the spot market may be about to come to an end, Chinese iron ore futures pushed higher in overnight trade.
The most actively traded September 2016 contract on the Dalian Commodities Exchange rose by 0.7% to 426.0 yuan, mirroring a similar gain in rebar futures traded on the Shanghai Futures Exchange.
Trade in futures markets will resume at 11am AEST.