- Iron ore spot markets fell across the board again on Tuesday.
- The move could be linked to looming steel production curbs in China over winter. A burst of strength in the Chinese yuan may have also promoted selling in futures markets.
- China will release industrial output and fixed asset investment data for October on Wednesday.
Iron ore spot markets fell across the board again on Tuesday, moving further away from the multi-month or multi-year highs struck in recent weeks.
According to Metal Bulletin, the price for benchmark 62% fines dipped 0.4% to $75.73 a tonne, leaving it at the lowest level in a week.
Lower and higher grades fell harder than the benchmark with 58% fines and 65% Brazilian fines slumping 0.8% and 0.9% respectively to $44.83 and $95.40 a tonne.
The move in spot markets mirrored similar weakness in Chinese bulk commodity futures traded in Dalian.
Iron ore futures slipped to 516 yuan, down marginally from Monday’s night session close.
Coking coal and coke contracts also eased, dipping to 1,343.5 and 2,303.5 yuan respectively, down from 1,361.5 and 2,319.5 yuan on Monday evening.
The weak performance from the bulks came despite mixed steel prices in Shanghai.
Rebar futures rose to 3,883 yuan, up from the prior close of 3,876 yuan, while hot-rolled coil futures finished at 3,612 yuan, near unchanged from Monday’s night session close of 3,616 yuan.
The mixed performance across the steel and bulks complex could reflect the impact of steel output restrictions in China over winter, potentially limiting demand for raw materials.
A sharp rally in the Chinese yuan during the session may have been another factor behind the slide in the bulks. Some have speculated that commodity futures are used by some investors as a currency hedge against potential further yuan weakness.
As seen in the scoreboard below, most contracts finished flat to lower in overnight trade on Tuesday.
SHFE Hot Rolled Coil ¥3,591 -0.47%
SHFE Rebar ¥3,876 , 0.23%
DCE Iron Ore ¥509.50 , -1.16%
DCE Coking Coal ¥1,344.50 , -0.22%
DCE Coke ¥2,311.00 , 0.17%
The performance from futures points to a soft start to trade in spot markets on Wednesday.
Whether that continues later in the session will largely be determined by the release of Chinese industrial output and fixed asset investment figures for October at 1pm AEDT.
From a year earlier, the former is expected to increase by 5.7%, down from 5.8% in the year to September. Between January to October, urban fixed asset investment is tipped to have risen by 5.5% from the same period a year earlier, up from an annual pace of 5.4% in the first nine months of the year.
Trade in Chinese commodity futures will resume a hour before the data at midday AEDT.