Spot iron ore prices were hammered on Monday, making it five big losses in the past six sessions.
According to Metal Bulletin, the spot price for benchmark 62% fines tumbled 4.1% to $8.57 per dry tonne, extending its decline from this year’s high of $94.86 per tonne set on February 21 to 14%.
It now sits at the lowest level since February 6.
As a result of the recent reversal, its now trimmed its gain this year to just 3.4%, well below the 20% plus levels seen earlier this year.
Lower grade ores were hit even harder than the benchmark with the price for 58% fines sliding by 5.6% to $54.83 per tonne, leaving it sitting at the lowest levels since December 22.
Metal Bulletin said the decline followed renewed weakness in Chinese steel prices.
“China’s spot rebar prices fell on Monday after a sharp drop in the billet market over the weekend,” the group said.
“Billet prices plunged 120 yuan per tonne during the weekend after a decrease of 40 yuan per tonne late last Friday, which weighed on rebar prices in the spot market. Poor performing futures also added to the bearishness.
“Market participants are mostly expecting prices to fall further amid weak demand and high inventory levels,” it added.
Sentiment was unlikely to have been helped by reports that Hebei province in China, a major steel-producing region, had launched a fresh probe into steel overproduction in the city of Tangshan.
It is said to have been prompted by concerns that steel mills continued to ramp up production levels despite the implementation of mandatory production cuts from the government.
“Hebei was ordered by China’s central government to investigate firms in Tangshan that have ‘restricted but not cut production, restricted production but not actually cut emissions, and cut capacity but actually increased output’,” said Reuters, citing a provincial notice dated March 25 circulated by traders on Monday.
That report corresponded with renewed selling pressure in Chinese rebar futures on Monday with the September 2017 contract on the Shanghai Futures Exchange falling to as low as 3,055 yuan during the session, a level not seen since February 7.
In overnight trade, commodity futures continued to weaken, although many contracts closed above the lows struck during Monday’s day session. The one exception was coking coal and coke futures which were hammered by 6% and 4.1% respectively.
SHFE Rebar ¥3,103 , -0.26%
DCE Iron Ore ¥548.00 , -1.70%
DCE Coking Coal ¥1,119.00 , -6.01%
DCE Coke ¥1,602.00 , -4.13%
Trade in Chinese futures will resume at midday AEDT.