Iron ore just got clobbered

Photo by Bradley Kanaris/Getty Images.
  • Iron ore markets suffered their second consecutive 3%-plus fall on Monday.
  • The benchmark price has fallen 15% since March 1, weighed down by concerns over the outlook for steel mill demand.
  • Futures markets were largely unchanged in overnight trade.

Iron ore is getting smoked, suffering its second consecutive 3%-plus fall on Monday.

And with futures failing to bounce in overnight trade, there’s no guarantee that the selling pressure will ebb on Tuesday.

According to Metal Bulletin, the spot price for benchmark 62% fines tumbled 3.4% to $67.45 a tonne, leaving it at the lowest level since December 7.

The benchmark has now lost 15% from March 1.

Larger losses were recorded across both higher and lower grades, particularly the latter.

58% fines shed 5.8% to close at $38.08 a tonne. Ore with 65% Fe content slumped 4% to settle at $83.80 a tonne.

The steep losses followed another bloodbath in Dalian iron ore futures with the May 2018 contract sliding over 4.5% to close at 462.5 yuan a tonne, a level not seen since early November.

The losses coincided with news that iron ore inventories held at Chinese ports jumped to 159.18 million tonnes as at March 16, up 600,000 tonnes on a week earlier.

In absolute terms, that is the highest level on record.

Coke futures were also hammered, losing 2.4% to close at 1,945 yuan. Coking coal futures fared a little better, finishing the session near-flat at 1,286 yuan a tonne.

Those losses reflected a large slide in rebar futures in Shanghai which skidded 2.3% to finish trade at 3,651 yuan a tonne.

The price action suggests deteriorating sentiment towards Chinese steel consumption flowed through to pessimism over the demand outlook for iron ore, coke and coking coal from steel mills in the months ahead.

“Weak Chinese property data weighed on the sector,” said analysts at ANZ Bank.

“House prices gained in only 44 of the 70 cities tracked in February, compared with 52 in January, according to National Bureau of Statistics data.”

Providing few clues as to whether weakness across the steel complex will continue on Tuesday, Chinese commodity futures were little changed in overnight trade.

Here’s the final scoreboard.

SHFE Rebar ¥3,659 , -0.44%
DCE Iron Ore ¥462.50 , -1.70%
DCE Coking Coal ¥1,287.50 , 0.43%
DCE Coke ¥1,944.50 , -0.84%

Iron ore finished unchanged from the day session close, mirroring similar performances from coke and coking coal.

Rebar futures edged higher by eight yuan a tonne.

Trade in Chinese commodity futures will resume at midday AEDT.

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