Iron ore is under pressure

Marty Melville/AFP/Getty Images

Iron ore is under pressure.

According to Metal Bulletin, the spot price for benchmark 62% fines tumbled 1.8% to $72.97 a tonne on Tuesday, leaving it at its lowest level since December 28 last year.

It’s now lost 7.7% since January 11.

The weakness in the benchmark was evident in higher grades, although not to the same degree.

Ore with 65% Fe content slid 0.4% to $89 a tonne, continuing the narrow trading range seen in recent weeks.

Curiously, lower grades escaped the selling pressure with the price for 58% fines unchanged at $40.70 a tonne.

Analysts put the selling down to icy conditions in many northern Chinese provinces, crimping demand from steel mills and the construction sector.

The losses in spot markets followed a choppy session in Chinese commodity futures on Tuesday.

Dalian iron ore finished at 517.5 yuan a tonne — around the same levels as Monday’s night session close — while rebar futures in Shanghai slipped to 3,921 yuan a tonne.

Both contracts traded lower during the session before recovering into the close.

As seen in the scoreboard below, there was very little movement upon those levels in overnight trade.

SHFE Rebar ¥3,928 , 0.13%
DCE Iron Ore ¥518.00 , 0.19%
DCE Coking Coal ¥1,285.00 , -0.62%
DCE Coke ¥1,988.50 , -1.80%

Trade in Chinese commodity futures will resume at midday AEDT, the same time that China will release manufacturing, non-manufacturing and steel industry PMI figures for January.

Given this will look at construction, manufacturing and steel demand, all three releases carry the potential to move spot and futures markets today.

Underlining this point, on several times last year iron ore spot markets moved more than 2.5% on the day the PMI figures were released.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.