Iron ore markets remain quiet despite signs of firmer Chinese demand

Paula Bronstein/Getty Images
  • Iron ore spot markets were quiet again on Friday with limited movement recorded.
  • Utilisation rates at Chinese steel mills improved again last week. Chinese steel inventories held by traders also continued to fall, indicating stronger demand from end-users.
  • Chinese steel and bulk commodity futures reversed earlier losses to close marginally higher on Friday evening.

Iron ore markets closed mixed on Friday, failing to benefit from signs of strengthening demand in China.

According to Metal Bulletin, the spot price for benchmark 62% fines rose 0.1% to $93.58 a tonne. Elsewhere, 58% fines slipped by 0.3%, settling at $79.62 a tonne, while 65% fines were steady at $107.40 a tonne.

The mixed and limited price movements came despite a swathe of bullish data on Chinese steel production and demand released during the session.

According to Reuters, citing data from Mysteel consultancy, weekly utilisation rates at Chinese steel mills rose again last week, lifting 0.55 percentage points to 70.58%.

Separately, steel inventories held by Chinese traders fell by 611,300 tonnes to 12.72 million tonnes last week, according to additional data released by Mysteel.

The data suggests demand for steel, and its raw ingredients, are continuing to improve as Chinese construction levels begin to ramp up.

However, as was the case in physical markets, the data had little to no impact on Chinese steel and bulk commodity futures on Friday.

Rebar futures in Shanghai rose to 3,739 yuan, up from 3,730 yuan on Thursday evening, while Dalian iron ore dipped to 618.5 yuan, down from the prior night session close of 623.5 yuan.

Coking coal and coke futures in Dalian also slipped, finishing at 1,347 and 2,015 yuan respectively.

Fitting with the choppy price movements that have become a near constant in recent weeks, those earlier moves were reversed in overnight trade on Friday.

SHFE Hot Rolled Coil ¥3,707 , 0.90%
SHFE Rebar ¥3,766 , 0.88%
DCE Iron Ore ¥623.50 , 0.56%
DCE Coking Coal ¥1,352.00 , 0.04%
DCE Coke ¥2,017.50 , -0.66%

Steel futures Shanghai rose, helping to drag bulk commodity contracts along for the ride.

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

Of note, Chinese manufacturing, non-manufacturing and steel industry PMIs for April will be released on Tuesday, April 30. In the past these reports have often led to large movements in both iron ore spot and futures markets.

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