Iron ore traders didn't know what to do on Wednesday

Ezra Shaw/Getty
  • Iron ore spot markets closed mixed on Wednesday with prices varying wildly across the grades.
  • Chinese rebar and iron ore futures fell, coinciding with another steep plunge in listed Chinese property developers during the session.
  • Rebar futures reversed those losses and more in overnight trade, pointing to the likelihood that spot markets will start off on a firmer footing today.

Iron ore markets were all over the shop on Wednesday with prices varying wildly across the grades.

According to Metal Bulletin, the price for benchmark 62% fines slumped 3% to $64.60 a tonne, reversing all of the gains, and more, seen over the previous three sessions.

It currently sits at a one-month low, albeit it remains firmly entrenched in the trading range it’s been stuck in since March.

In contrast to the performance from the benchmark, lower and higher grades fared significantly better on Wednesday.

The price of 58% fines fell 0.7% to $37.99 a tonne.

The price of 65% fines didn’t fall at all, lifting by 0.2% to $90.60 a tonne.

The mixed performance followed a topsy-turvy session for Chinese steel and bulk commodity futures which reversed earlier gains to finish lower.

Rebar futures in Shanghai finished at 3,672 yuan, having traded as high as 3,713 earlier in the day. They closed Tuesday’s night session at 3,695 yuan.

The reversal in rebar flowed through to iron ore futures in Dalian which closed on their lows at 461 yuan. The September 2018 contract closed at 465.5 yuan on Tuesday evening, and been as high as 467.5 yuan earlier in the session.

The modest reversal coincided with another ugly day for Chinese stocks, especially for listed real estate developers which slumped by 4%.

Real estate construction accounts for a large share of Chinese steel demand.

However, after coming under pressure during Wednesday’s day session, rebar futures ripped higher in overnight trade, pointing to the likelihood that spot markets will start on a firmer footing today.

SHFE Rebar ¥3,766 , 2.11%
DCE Iron Ore ¥467.00 , 0.76%
DCE Coking Coal ¥1,193.00 , 0.68%
DCE Coke ¥2,063.50 , 1.38%

The October 2018 rebar contract added close to 100 yuan, dragging iron ore, coking coal and coke futures along for the ride.

Sentiment may have been boosted by an apparent lessening in trade tensions between China and the United States, including when Chinese futures were trading.

However, that optimism all but vanished in the latter parts of the session, hinting that bulk and steel contracts may do the same today.

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

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