- Iron ore spot markets fell across the board on Friday, registering a third consecutive day of declines for only the first time since late April.
- Chinese iron ore futures shed 3.5% during the week, the largest decline since late May. The slide coincided with renewed buying in Chinese stocks and yuan.
- Chinese steel inventories continued to fall last week. Blast furnace capacity utilisation rates in China also started to soften as output curbs began to kick in.
Iron ore spot markets fell across the board on Friday, registering a third consecutive day of declines for only the first time since late April.
According to Metal Bulletin, the price of benchmark 62% fines slumped 1.7% to $73.97 a tonne, leaving it at the lowest level since October 22.
It’s now fallen 3.6% after hitting a multi-month high of $76.71 on Tuesday.
Losses were also recorded across lower and higher grades on Friday.
The price of 58% fines shed 1.3% to $44.93 a tonne, more than three-times larger than the 0.4% decline seen for 65% Brazilian fines which settled at $96.50 a tonne.
It was the third successive session that declines were seen across all major grades, something that has not been seen since April 27 this year.
The falls coincided with data showing blast furnace capacity at Chinese steel mills fell marginally last week, declining 0.69 percentage points to 67.54%, according to data from Mysteel Consultancy.
Rebar futures in Shanghai finished Friday’s day session at 4,064 yuan — the same levels as the close on Thursday evening — having fallen to 4,025 yuan earlier in the session.
Hot-rolled coil futures also recovered from earlier losses, ending trade at 3,744 yuan, up from Thursday’s night session close of 4,064 yuan.
The turnaround followed news Chinese steel inventories continued to fall last week, as well as speculation that trade negotiations between the United States and China were progressing.
Mysteel said steel product inventories held by Chinese traders fell by 419,800 tonnes to 9.38 million tonnes last week. Rebar inventories — largely used in construction — slumped by 5.8% while hot-rolled coil inventories — more widely used in manufacturing — slipped by a smaller 0.8%.
Despite the mixed data on the outlook for demand, the rebound in steel futures did not extend to iron ore futures traded separately in Dalian.
The January 2019 iron ore contract slumped to 508.5 yuan, down substantially from 520.5 yuan on Thursday evening. It briefly fell to as low as 501.5 yuan, registering the largest percentage intraday decline since June 19.
For the week, the January 2019 contract slumped 3.5%, the steepest since late May.
The turnaround coincided with renewed buying in Chinese stocks and yuan in the second half of the week, potentially leading to an unwind of some currency and trade war-related positioning from investors.
Coking coal and coke futures finished mixed with the former closing sharply lower while the latter rallied hard in the final parts of the session.
As seen in the scoreboard below, most contracts finished flat to modestly higher in overnight trade on Friday.
SHFE Hot Rolled Coil ¥3,762 1.59%
SHFE Rebar ¥4,060 , 0.25%
DCE Iron Ore ¥508.50 , -0.49%
DCE Coking Coal ¥1,371.00 , 0.62%
DCE Coke ¥2,368.00 , 1.70%
The mixed performance offers few clues as to what direction physical markets will travel today.
Trade in Chinese futures will resume at midday AEDT.