Iron ore is getting smoked

Photo: Mal Fairclough/AFP/Getty Images)

Chinese iron ore futures are getting smoked, plummeting even further upon the resumption of trade on Friday after sliding 5.4% overnight.

Here’s the scoreboard at the mid-session break:

SHFE Rebar ¥3,080 , -4.91%
DCE Iron Ore ¥525.00 , -7.08%
DCE Coking Coal ¥1,276.00 , -4.42%
DCE Coke ¥1,810.50 , -4.76%


The September 2017 contract in the Dalian Commodities Exchange is currently down a massive 7.08% at 525 yuan per tonne, leaving it sitting at the lowest level since January 10.

It’s now lost 23.4% from the high of 685 yuan struck on February 21, leaving it in a technical bear market.

As the scoreboard reveals, while iron ore is leading the losses in terms of size, it’s not been a good session either for rebar, coking coal and coke futures which have also been whacked.

Steel sentiment — at least based on the price action in these contracts — is looking pretty grim.

The speed and the size of the plunge across the complex suggests that it is being driven by speculators unwinding bullish bets after an attempted rebound earlier in the week failed to be sustained.

The selloff in iron ore may also be due to elevated levels of Chinese port inventories that have risen sharply in recent months.

Stocks stocks stood at 132.1 million tonnes last week, according data from Shanghai SteelHome, near the record-high of 132.45 million tonnes reported in the previous week.

On Thursday, the spot price for benchmark 62% iron ore fines fell by 0.76% to $80.92 a tonne, according to Metal Bulletin, partially reversing the 2.63% gain of the previous session.

Should the decline in iron ore futures be sustained in the second half of the session, it points to the likelihood of an even largest fall being registered in spot markets today.

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