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.