Iron ore markets are pretty dull at present

  • Iron ore markets are pretty dull at present.
  • Spot markets finished mixed on Wednesday despite modest strength in Chinese futures.
  • China will release industrial output and fixed asset investment figures for May today.

Iron ore markets are pretty dull at present.

Prices remain choppy and largely directionless, continuing the theme seen over the past few months.

That continued on Wednesday.

According to Metal Bulletin, the spot price for benchmark 62% fines slipped 0.3% to $67.02 a tonne, extending the streak of moving in the opposite direction to the previous day into a third consecutive session.

As the chart below shows, the price is choppy and limited to a narrow range for the moment.

Like the benchmark, the movements elsewhere were also limited.

The price for 58% fines fell 0.3% to $39.19 a tonne while 65% fines added 0.3%, closing at $88.50 a tonne.

The mixed performance followed another burst of buying in Chinese rebar futures on Wednesday.

The October 2018 contract finished the session at 3,859 yuan, up marginally on Tuesday’s night session close. It traded higher earlier in the day.

Data from China’s Iron and Steel Association revealed that crude steel output by major steel firms fell in late May, dipping to a daily average of 1.95 million tonnes, down from 2 million tonnes earlier in the month.

The strength flowed through to iron ore futures in Dalian with the September 2018 contract finishing trade at 471.5 yuan, up from Tuesday’s night session close of 468 yuan.

As seen in the scoreboard below, both rebar and iron ore futures continued to grind higher in overnight trade.

SHFE Rebar ¥3,879 , 0.41%
DCE Iron Ore ¥472.50 , 0.64%
DCE Coking Coal ¥1,258.50 , -0.51%
DCE Coke ¥2,143.00 , 0.30%

Late Wednesday, China’s state council announced a ban on new steel production capacity in some parts of the country, including the Beijing-Tianjin-Hebei and Yangtze River Delta regions, according to Reuters.

This may explain the modest bid seen overnight, at least in rebar contracts.

Trade in all Chinese commodity futures will resume at 11am, one hour before the release of Chinese industrial output and urban fixed asset investment for May.

These releases include crude steel output and data on property construction.

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