Iron ore spot markets fell on Wednesday, weighed down by concerns that extensions to steel production restrictions will limit demand.
According to Metal Bulletin, the price for benchmark 62% fines slid 0.7% to $78.61 a tonne, pulling further away from the six-month high of $79.36 a tonne struck on Monday.
The weakness in the benchmark was mirrored across the grades.
Ore with 65% Fe content fell 0.3% to $94.90 a tonne, outpaced by a 0.6% drop in the price for 58% fines which fell to $44.12 a tonne.
Recent weakness in spot markets coincides with news that the Chinese city of Tangshan will extend restrictions on steel production out to November this year, an announcement that has helped to boost steel prices but also increase concern about the outlook for iron ore and coking coal demand.
Tangshan, in the heavily industrialised Hebei province, accounts for around 12% of China’s total annual steel output.
The losses on Wednesday also followed a disappointing set of PMI figures for China’s manufacturing and non-manufacturing sectors in February.
However, hinting that the weakness in spot markets may not last, Chinese iron ore futures inched higher in overnight trade.
Here’s the scoreboard.
SHFE Rebar ¥4,058 , 0.97%
DCE Iron Ore ¥547.00 , 0.74%
DCE Coking Coal ¥1,406.50 , -0.64%
DCE Coke ¥2,260.50 , 0.47%
The May 2018 iron ore contract in Dalian rose to 547 yuan a tonne, up from Wednesday’s day session close of 543 yuan a tonne.
Rebar futures traded separately in Shanghai also rallied, rising to 4,058 yuan a tonne, the highest level since early December.
That was up from Wednesday’s day session close of 4,020 yuan a tonne.
Trade in all Chinese commodity contracts will resume at midday AEDT, 45 minutes before the release of the Caixin-IHS Markit China manufacturing PMI gauge for February.
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