Iron ore's losing streak is over

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  • Iron ore spot markets bounced on Tuesday after tumbling more than 8% to start the week.
  • The modest reversal came despite continued falls in Chinese steel and bulk commodity futures.
  • Futures markets finished flat to higher on Tuesday evening, hinting that the stabilisation in physical markets may continue into Wednesday’s trading session.

Iron ore spot markets bounced on Tuesday, partially recouping some of the 8% plus falls seen on Monday.

According to Metal Bulletin, the price for benchmark 62% fines rose 1.5% to $65.19 a tonne, snapping a five session losing streak in the process.

The price of 58% fines added 0.9%, settling at $40.06 a tonne, while the price for 65% Brazilian fines increased by 1% to $81.80 a tonne.

All three grades fell between 8.3% to 9.1% on Monday, driven by prior declines in steel prices that raised questions about the outlook for iron ore demand.

The bounce in spot markets came despite another shellacking in Chinese steel and bulk commodity futures on Tuesday.

Rebar futures in Shanghai finished at 3,579 yuan, down from 3,649 yuan on Monday evening. Hot-rolled coil futures also fell.

The weakness in spot markets was mirrored in bulk commodity contracts traded separately in Dalian.

A day after closing limit down 6%, iron ore futures remained in the wars, finishing the session at 465.5 yuan. That was down from 473.5 yuan on Monday evening. It briefly fell to as low as 459 yuan, a level not seen in close to five months.

Coking coal and coke futures were also pressured, finishing trade at 1,306.5 and 2,080 yuan, down from Monday’s night session close of 1,319 and 2,146 yuan.

As seen in the scoreboard below, all five contracts finished flat to higher in overnight trade on Tuesday, pointing to the likelihood of a further stabilisation in physical markets on Wednesday, at least in initial trades.

SHFE Hot Rolled Coil ¥3,403 , -0.44%
SHFE Rebar ¥3,578 , -0.31%
DCE Iron Ore ¥469.00 , 0.43%
DCE Coking Coal ¥1,314.00 , 0.46%
DCE Coke ¥2,102.00 , -0.57%

Chinese commodity futures will reopen at midday AEDT.

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