Iron ore got a boost from upbeat Chinese economic data

David Rogers/Getty Images
  • Iron ore spot markets finished mixed on Thursday. The benchmark fell while lower and higher grades increased.
  • China released stronger-than-expected manufacturing and non-manufacturing PMI reports on Thursday, helping to boost sentiment during the session.
  • Chinese commodity futures continued to rally in overnight trade, showing little reaction to news the United States will begin to place tariffs on steel imports from other major trading partners from today.

Iron ore spot markets finished mixed on Thursday as weakness in the benchmark masked strength in lower and higher grades.

According to Metal Bulletin, the price for benchmark 62% fines slipped 0.7% to $65.32 a tonne having surged 3% a day earlier.

However, while the benchmark fell, it was the exception to the broader rule on Thursday.

The price of 58% fines rose 0.4% to $38.31 a tonne while 65% fines outperformed, lifting by 1.1% to $85.80 after surging 2.3% a day earlier.

Perhaps explaining the strength in higher grades, Chinese steel futures continued to rally, helped in part by the release of strong Chinese economic data during the session.

Rebar futures in Shanghai finished at 3,696 yuan, up from Wednesday’s night session close of 3,663 yuan.

That helped to underpin gains in bulk commodity contracts with Dalian iron ore futures finishing at 462.5 yuan, up one yuan from the prior close.

Coking coal and coke also finished with modest gains for the session.

The strength in futures was likely helped by reasonable Chinese manufacturing and non-manufacturing PMI’s for May.

The government’s manufacturing PMI rose to 51.9, up from 51.4 a month earlier, while the separate non-manufacturing PMI ticked up from 54.8 to 54.9.

“Coming as many major nations see their PMIs turn lower, this is a very pleasing result,” said Elliot Clarke, Economist at Westpac Bank.

However, China’s steel industry PMI — measuring perceived activity levels across China steel sector — went in the other direction, falling from 51.7 to 50.6.

It’s lower profile ensured this result was largely overlooked.

Suggesting that recent gains in spot markets may continue today, Chinese futures continued to rally in overnight trade, showing little reaction to news that the United States will place tariffs on steel imports from other major trade partners from today.

Here’s the final scoreboard.

SHFE Rebar ¥3,751 , 2.18%
DCE Iron Ore ¥465.50 , 0.87%
DCE Coking Coal ¥1,258.50 , 2.53%
DCE Coke ¥2,104.50 , 1.52%

All contracts finished higher, led once again by strength in rebar futures.

Trade will resume from 11am AEST.

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