Iron ore spot markets fell across the board on Thursday, undermined by a sharp drop in Chinese steel prices during the session.
According to Metal Bulletin, the spot price for benchmark 62% fines slid by 0.33% to $70.20 a tonne, registering its first decline in four days.
Higher and lower grades also weakened by a similar margin.
Ore with 65% Fe content fell 0.47% to $85.30 a tonne, while the price for 58% fines slid by a larger 1.17% to $47.97 a tonne.
Metal Bulletin said that the weakness followed a sharp plunge in Chinese steel markets earlier in the session.
“China’s spot rebar prices tumbled on Thursday amid weakening demand and rising inventory levels. Many construction sites have stopped work due to bad weather, resulting in a drop in end-user demand, market participants said,” the group said.
“Mills’ high production rates have resulted in an increase in both the steelmakers’ and the spot market’s inventory levels, which weigh on steel prices.”
However, casting doubt as to whether the weakness in steel and iron ore markets will persist today, Chinese futures rebounded strongly overnight.
The most active rebar contract on the Shanghai Futures Exchange rose 1.1% to 3,592 yuan, while iron ore futures in Dalian added a nifty 1.63%, closing the session at 530.5 yuan.
Coke and coking coal contracts also eked out gains.
SHFE Rebar ¥3,592 , 1.10%
DCE Iron Ore ¥530.50 , 1.63%
DCE Coking Coal ¥1,282.50 , 0.83%
DCE Coke ¥1,952.50 , 0.59%
Should the moves in rebar and iron ore contracts continue today, it points to the likelihood of a rebound in spot iron ore markets when Metal Bulletin releases its Iron Ore Index later in the session.
Trade in Chinese commodity futures will resume at 11am AEST.