Iron ore is under pressure

Photo: Getty Images

Iron ore spot markets fell heavily for a fourth session in five on Friday, in line with a sell-off across broader commodity markets.

And with Chinese futures sliding again on Friday evening, it looks like the selling pressure may extend into Monday’s trading session.

According to Metal Bulletin, the price for benchmark 62% fines slid 1.65% to $74.36 a tonne, taking its losses for the week to 5.8%.

It now sits at the lowest level since August 16.

The weakness in the benchmark was replicated across the grades, albeit by a far smaller margin.

The price for 58% fines lost 0.2% to $46.92 a tonne while ore with 65% Fe content fell by 0.4% to $98.30 a tonne.

The losses in spot markets followed a sharp decline in Chinese commodity futures earlier in the session, including for iron ore and rebar.

The January 2018 iron ore contract in Dalian lost 2.8%, finishing Friday’s day session at 534.5 yuan per tonne. Rebar futures in Shanghai also came under pressure, sliding 1.7% to 3,916 yuan per tonne.

Some put the weakness down to a sharp rally in the Chinese yuan on Friday, leaving it at a fresh multi-year high against the US dollar. It also followed trade data from China and Australia’s Pilbara Ports Authority which revealed Chinese demand for iron ore rose modestly in August.

Whatever the reason behind the broader weakness in futures, the selling pressure continued on Friday evening.

Here’s the final scoreboard from Friday’s night session.

SHFE Rebar ¥3,854 , -2.70%
DCE Iron Ore ¥524.00 , -3.94%
DCE Coking Coal ¥1,376.00 , -2.52%
DCE Coke ¥2,331.00 , -3.22%

At 524 yuan per tonne, iron ore futures now sit at the lowest level since mid-August, extending its losses from late August to over 13%.

Trade in Chinese futures will resume at 11am AEST.

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