Iron ore markets remain choppy

PARK JI-HWAN / AFP / Getty Images

Iron ore spot markets remain choppy, falling modestly on Thursday after ripping higher on Wednesday.

And with Chinese futures largely unchanged overnight, it’s looking like that trend may continue today.

According to data from Metal Bulletin, the spot price for benchmark 62% fines fell by 0.97% to $61.60 a tonne, partially reversing the 1.68% gain recorded on Thursday.

Year to date it has fallen 21.9%.

Lower grade ores underperformed the benchmark with the price for 58% fines sliding 1.33% to $41.40 a tonne.

“The iron ore market reverted back to its recent negative trajectory today as marginal gains witnessed over the past few days proved unsustainable,” said Metal Bulletin.

The group said that the losses in iron ore markets came despite modest strength in Chinese rebar and iron ore futures earlier in the session, something that continued in overnight trade.

The most actively traded September 2017 iron ore future on the Dalian Commodities Exchange closed 0.42% higher at 476 yuan per tonne, while the September 2017 rebar contract on the Shanghai Futures Exchange closed up 2.15% at 3,187 yuan per tonne.

Coke and coking coal futures also added in excess of 1.4%.

Trade in all contracts will resume at 11am AEST.

SHFE Rebar ¥3,187 , 2.15%
DCE Iron Ore ¥476.00 , 0.42%
DCE Coking Coal ¥1,053.50 , 1.54%
DCE Coke ¥1,559.00 , 1.46%

While iron ore spot prices remain choppy after falling to multi-month low last week, with Chinese steel inventories lower than usual and steel mill margins elevated, Vivek Dhar, mining and energy analyst at the Commonwealth Bank, suggests that may support iron ore prices in the near-term.

“Chinese steel rebar stockpiles are now nearly 30% below the historic average. Together with a rebound in steel mill margins, there is a real chance that iron ore prices could rebound in the short term,” says Dhar. “We would closely watch for a pick-up in steel output rates in China to confirm stronger iron ore demand.”

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