Iron ore spot markets rebounded modestly on Monday, recouping some of the losses recorded on Friday when prices tumbled to a fresh 11-month low.
According to Metal Bulletin, the spot price for benchmark 62% fines rose by 0.85% to $54.87 a tonne, snapping a three-day losing streak in the process.
On Friday it tumbled 1.7% to $54.41 a tonne, extending its losses from February 21 to 42.6%. That was also the lowest level since July 1, 2016.
Mirroring the movement in the benchmark, the price for lower grades also rose while higher grades held steady.
The price for 58% fines jumped 1.85% to $37.96 a tonne, recovering some of the 4.6% decline reported on Friday.
Metal Bulletin said that the rebound in iron ore prices coincided with renewed strength in Chinese steel markets.
“East China’s spot rebar prices picked up some upward momentum on Monday as trading activity rose amid strengthening billet market,” the group said.
“With price of rebar rising a second consecutive trading day, the spot rebar market in east China received a bit of boost, resulting in trading activity picking up. This led to spot rebar prices in the region rising accordingly.”
Last week, Vivek Dhar, commodity and energy analyst at the Commonwealth Bank, said there was a strong case for a short-term rebound in iron ore markets given widening production margins for Chinese steel mills.
“With steel mill margins spiking higher, we see a strong case for iron ore prices rebounding modestly in the next couple of months,” he said.
Continuing a familiar theme, Chinese commodity futures did very little in overnight trade, providing few clues as to whether the momentum in spot markets will continue on Tuesday.
The most actively traded September 2017 iron ore contract on the Dalian Commodities Exchange fell 0.46% to 429 yuan per tonne. Rebar futures on the Shanghai Futures Exchange went the other direction, adding 0.07% to 3,032 yuan per tonne.
Coke and coking coal futures also finished mixed for the session.
SHFE Rebar ¥3,032 , 0.07%
DCE Iron Ore ¥429.00 , -0.46%
DCE Coking Coal ¥954.50 , -0.68%
DCE Coke ¥1,446.50 , 0.17%
Trade in Chinese futures will resume at 11am AEST.