Iron ore is stabilising following its recent rout

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Iron ore spot markets finished mixed on Monday with mid and higher grades continuing to slide while lower grades bounced modestly.

But with Chinese futures stabilising in overnight trade, it looks like the recent rout may be over, at least in the short-term.

According to Metal Bulletin, the price for benchmark 62% fines fell by a further 0.8% to $63.06 a tonne, leaving it at a three-month low.

Higher grades also came under pressure during the session. Ore with 65% Fe content slid by 1% to $87.30 a tonne.

However, lower grades managed to buck the downward trend with 58% fines rising 0.8% to $38.99 a tonne.

The mixed performance followed news that several major Chinese cities had introduced tougher restrictions on home buyers over the weekend, adding to uncertainty about the demand outlook for building materials, including steel.

Concerns that steel production curbs during the Chinese winter will limit iron ore demand in the months ahead were also another factor behind the ongoing slide in spot markets.

However, after tumbling more than 20% over the past couple of weeks, there are signs that the iron ore price rout may be coming to an end.

Chinese futures have stabilised in recent days, hinting that recent price declines my be encouraging dip-buyers to move in.

Here’s the final scoreboard for rebar, iron ore and coal contracts overnight.

SHFE Rebar ¥3,591 , 0.22%
DCE Iron Ore ¥469.00 , 0.64%
DCE Coking Coal ¥1,185.00 , 0.64%
DCE Coke ¥2,035.00 , 1.34%

Rebar futures in Shanghai finished at 3,591 yuan per tonne, down marginally from Monday’s closing level of 3,603 yuan. Iron ore futures were also largely unchanged, finishing trade at 469 yuan, up from 468 yuan at Monday’s day session close.

Coke and coking coal futures also bounced after falling heavily on Friday evening.

Trade in Chinese commodity futures will resume at 11am AEST.

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