Iron ore has been hosed

Photo by Lam Yik Fei/Getty Images
  • Iron ore spot and futures markets tumbled on Friday, falling to fresh multi-month lows.
  • The announcement of proposed US tariffs on Chinese steel imports, and retaliatory measures proposed by China, were cited as the main catalyst behind the selloff.
  • Chinese futures finished flat to higher on Friday evening, hinting that the losses may slow or even partially reverse on Monday.

Iron ore markets tumbled on Friday, falling to the lowest level in four months.

According to Metal Bulletin, the spot price for benchmark 62% fines slumped 3.9% to $64.58 a tonne, leaving it at the lowest level since November 21.

It lost 7.5% for the week, extending its decline from March 1 to 18.7%, just shy of the 20% level defined as a technical bear market.

Steep losses were also seen across lower and higher grades during the session.

The price for 58% fines tumbled 4.6% to settle at $37.17 a tonne. Ore with 65% Fe content fared a little better, losing 2.5% to close at $81.40 a tonne.

The sharp losses followed an even uglier day session for Chinese steel and iron ore futures on Friday.

The May 2018 rebar contract in Shanghai hit limit down 7% at 3,369 yuan a tonne, the lowest level since July last year.

Iron ore futures traded separately in Dalian skidded 6.42% to close at at 437.5 yuan a tonne, recovering slightly after hitting limit down 8% at one point during the session.

It closed at the lowest point since June.

Coke and coking coal contracts were also under pressure, losing 6% and 4.4% respectively to settle at 1,852 yuan and 1,230 yuan a tonne.

Analysts put the steep decline across spot and futures markets down to heightened fears over a potential trade war erupting by the United States and China following tit-for-tat moves against wither side announced on Thursday and Friday.

US President Donald Trump signed a presidential memorandum on Thursday targeting up to $60 billion in Chinese goods imports, including those for steel entering the United States.

The tariffs will be introduced after a 30-day consultation period between the two nations.

In response, China announced plans to impose tariffs on up to $3 billion on US imports on Friday.

“The prospects of trade war between US and China has driven a systematic selloff in commodities,” Zhou Tao, an analyst with Citic Futures in Shanghai, told Reuters.

“The market is in panic.”

However, after logging steep declines earlier in the day, Chinese commodity futures stabilised in overnight trade with rebar and iron ore contracts finishing flat to higher compared to Friday’s day session close.

Here’s the final scoreboard.

SHFE Rebar ¥3,370 , -2.60%
DCE Iron Ore ¥439.00 , -1.90%
DCE Coking Coal ¥1,251.00 , 1.09%
DCE Coke ¥1,865.50 , -1.37%

Rebar futures were unchanged while iron ore, coke and coking coal contracts all edged higher, providing an early sign that the carnage in spot markets may not persist on Monday.

Trade in Chinese commodity futures will resume at midday AEDT.

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