Iron ore just had its largest fall in close to a month

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Iron ore spot markets tumbled on Thursday, logging the largest decline in close to a month.

According to Metal Bulletin, the price for benchmark 62% fines fell 2.1% to $61.96 a tonne, the largest percentage decline since June 13.

It has now lost 4.6% so far in July.


The weakness in the benchmark was also evident across the grades, although lower grades outperformed higher over the session.

The price for 58% fines fell 0.24% to $44.18, a significantly better performance than ore with 65% Fe content, which tumbled 2.1%.

Analysts at Metal Bulletin said the declines corresponded with further weakness across Chinese steel markets, led by a sharp in rebar futures.

“China’s spot rebar prices dropped on Thursday as bearish sentiment grew among market participants,” the group said.

“The most traded October rebar futures contract traded below Wednesday’s settlement price of 3,422 yuan per tonne during entire day on Thursday, which led to pessimism in the spot market intensifying.”

That likely contributed to weakness in iron ore futures during the session, helping to explain the sharp drop in spot markets.

However, if the trend of futures dictating sentiment in spot markets is maintained, the weakness in recent days may reverse in the current session.

Chinese futures closed well off the lows struck during Thursday’s day session.

Here’s the final scoreboard.

SHFE Rebar ¥3,379 , -0.38%
DCE Iron Ore ¥468.50 , 0.54%
DCE Coking Coal ¥1,116.00 , -0.04%
DCE Coke ¥1,778.00 , 0.65%

The most actively traded September 2017 iron ore futures had been as low as 457 yuan earlier in the session, while rebar futures traded in Shanghai also recovered after touching a low of 3,364 yuan.

If sustained, it suggests the weakness in spot markets may dissipate on Friday.

Trade resumes in Chinese futures at 11am AEST.

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