Iron ore prices continued to slide on Thursday with spot and futures markets finishing the session deep in the red.
But there are signs that the selling pressure may be starting to ebb.
According to Metal Bulletin, the spot price for benchmark 62% fines fell by a further 1.84% to $55.97 a tonne, extending its decline over the past two sessions to 4.32%. It’s now fallen 41% from February 21 this year.
Both higher and lower grade ores also fell during the session, albeit by a smaller degree to the benchmark.
Analysts at Metal Bulletin said the weakness coincided with a pullback in steel prices following news that Chinese steel production remained elevated in May.
“China’s spot rebar prices dropped on Thursday as trading thinned on the second day of work after the Dragon Boat Festival,” it said.
“Sentiment in the market deteriorated after the China Iron & Steel Association released statistics late on Wednesday showing its member mills’ daily crude steel output remaining at a high 1.81 million tones per day in the middle of May.
“This led buyers to lower their purchasing volumes to wait for prices to drop further.”
Sentiment was unlikely to have been helped by news that activity across China’s manufacturing sector deteriorated for the first time in nearly a year last month, according to the Caixin-IHS Markit manufacturing PMI.
The move in spot markets mirrored another ugly plunge in Chinese commodity futures with iron ore, rebar and coking coal contracts all logging multi percentage point declines for a second consecutive session.
However, after two days of heavy losses, futures markets closed mixed in overnight trade, hinting that the selling pressure may be starting to ebb.
Iron ore and coking coal contracts closed higher while rebar and coke futures recorded modest falls.
Here’s the final scoreboard.
SHFE Rebar ¥3,073 , -0.68%
DCE Iron Ore ¥423.50 , 0.47%
DCE Coking Coal ¥952.50 , 0.21%
DCE Coke ¥1,420.00 , -0.87%
Trade in Chinese futures will resume at 11am AEST.