Iron ore traders ignored the optimism in Chinese financial markets

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  • Iron ore spot markets finished mixed on Monday, showing little reaction to a surge in Chinese stocks, yuan and commodity futures during the session.
  • Chinese steel and iron ore inventories both fell last week, indicating that demand for steel product remains strong.
  • Chinese rebar futures continued to rally in overnight trade, although that didn’t flow through to bulk commodity contracts.

Iron ore spot markets meandered through the first day of the trading week, showing little reaction to the burst of buying support seen in Chinese stocks, yuan and commodity futures.

The spot price for benchmark 62% fines rose 0.1% to $63.92 a tonne, according to Metal Bulletin, adding to the 1.1% gain achieved on Friday.

Despite recording back-to-back gains, the benchmark remains just above the multi-month low of $63.14 a tonne struck late last week.

While the benchmark rose, most other grades saw prices soften during the session.

The price for 58% and 65% fines both slipped 0.2% to settle at $36.93 and $91.30 a tonne.

The mixed performance was in stark contrast to the surge in Chinese commodity futures on Monday.

Rebar futures in Shanghai finished at 3,830 yuan, well above Friday’s night session close of 3,750 yuan.

Aside from a sharp improvement in investor confidence seen on Monday, prices may have also been supported by news that Chinese steel inventories fell last week, reversing a modest increase over the prior two weeks.

Stocks held by traders fell by 154,600 tonnes to 10.1 million tonnes, according to data provided by Mysteel consultancy, hinting that demand remains firm despite heatwave-like conditions in some parts of the country and an uptick in capacity utilisation among Chinese steel mills.

Despite the surge in rebar futures, that didn’t translate through to similar buoyancy in Dalian iron ore futures which finished trade at 461.5 yuan, up marginally from the prior close of 457.5 yuan. It had traded weaker for the vast majority of the session before rallying home into the close.

Mysteel reported that Chinese iron ore port inventories also fell last week, dipping by 2.37 million tonnes to 153.42 million tonne.

Both coking coal and coke futures also inched higher, closing at 1,157.5 and 2,031 yuan respectively.

As seen in the scoreboard below, despite continued gains in rebar futures, there was very little movement in bulk commodity contracts during Monday’s night session.

SHFE Rebar ¥3,859 , 1.82%
DCE Iron Ore ¥462.00 , 1.09%
DCE Coking Coal ¥1,148.50 , -0.26%
DCE Coke ¥2,023.50 , 0.57%

Trade in all Chinese commodity contracts will resume at 11am AEST.

China will release consumer and producer price inflation data for June at 11.30am AEST today.

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