Iron ore has stumbled after a fast start to the week

Photo by Peter Macdiarmid/Getty Images

Iron ore fell fractionally on Tuesday, consolidating on the enormous 6% gain recorded on Monday.

According to Metal Bulletin, the spot price for benchmark 62% fines fell by 0.39% to $53.65 a tonne, bucking yet another huge increase in Chinese iron ore futures on Tuesday.

Year to date the spot price has now gained 23.1%.

Though unlikely to explain the small daily decline, analysts at Metal Bulletin note the loss came following news that Chinese steel production had slowed.

“Member mills of the China Iron & Steel Association (CISA) reported an average crude steel output of 1.68 million tpd [tonnes per day] in mid-June, down 3.54% from the preceding ten-day period,” said Metal Bulletin.

In overnight trade, Chinese iron ore futures continued to push higher, suggesting that more speculative elements of the iron ore market believe there’s more upside for the spot price to come.

The September 2016 contract on the Dalian Commodities Exchange rose by a further 0.84% to 419 yuan, leaving it trading at the highest seen since mid-May.

Given the divergence between spot and futures movements yesterday, it’s hard to determine which way prices are likely to travel on Wednesday.

Trade in Dalian will resume at 11am AEST.

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.