Iron ore surges ahead of key Chinese economic data

Oleg Nikishin/Getty ImagesBoom!
  • Iron ore spot markets surged on Wednesday, assisted by continued strength in Chinese steel prices.
  • The largest gains were concentrated across mid and higher grades.
  • China’s government will release a swathe of PMI reports today, including for the steel sector. Iron ore spot and futures markets have often logged substantial moves on China PMI days in the past.

Iron ore spot markets surged on Wednesday, assisted by continued strength in Chinese steel prices.

The largest gains were concentrated across mid and higher grades.

According to Metal Bulletin, the price for benchmark 62% fines jumped 3% to $65.78 a tonne, recouping much of the losses seen in the prior two sessions.

As seen in the chart below, the benchmark has been supported on any foray below the $64 a tonne level since the middle of March.

High grades also bounced with 65% fines adding 2.3% to $84.90 a tonne.

Lower grades lagged the broader move with 58% fines rising a modest 0.2% to $38.15 a tonne.

The strength in higher quality ores followed another rally in Chinese steel prices on Wednesday.

The October 2018 rebar future in Shanghai finished the day session at 3,644 yuan. It briefly hit a high of 3,667 yuan, the highest level in nearly two weeks.

Despite the strength in steel futures, iron ore futures in Dalian went on a wild ride, hitting a one-week high of 469 yuan before reversing hard into the close. It eventually settled at 455.5 yuan.

Coking coal and coke futures traded flat, barely moving from Tuesday’s night session close.

However, despite the mixed price performance during Wednesday’s day session, iron ore, coking coal and coke futures all managed to push higher in overnight trade as rebar futures clung on to earlier gains.

Here’s the final scoreboard.

SHFE Rebar ¥3,663 , 0.58%
DCE Iron Ore ¥461.50 , 0.22%
DCE Coking Coal ¥1,228.50 , 1.61%
DCE Coke ¥2,069.50 , 0.95%

Trade in Chinese commodity futures will resume at 11am AEST.

At the same time futures reopen, China’s government will release a swathe of PMI reports, including for the steel sector.

Whether due to these data points or not, iron ore spot and futures markets have often logged substantial moves on China PMI days in the past.

Something definitely worth paying attention to today.

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