Iron ore spot markets stabilised on Wednesday, helped by a recovery in Chinese futures.
According to Metal Bulletin, the price for benchmark 62% fines rose 0.3% to $74.53 a tonne, steadying after plunging 3% a day earlier.
Like the benchmark, modest gains were recorded across the grades.
Ore with 65% Fe content increased 0.2% to $90 a tonne, matching a 0.2% gain in 58% fines which rose to $40.81 a tonne.
“With inventories high and the Spring Festival fast approaching, physical trading has been muted,” said analysts at ANZ Bank.
The small gains in spot markets followed a stabilisation in Chinese iron ore and rebar futures on Wednesday.
The May 2018 iron ore contract in Dalian closed the day session at 522 yuan, around the same level as Tuesday’s night session close. Rebar futures, in comparison, outperformed, lifting to 3,937 yuan a tonne.
As seen in the scoreboard below, there was very little movement from those levels in overnight trade.
SHFE Rebar ¥3,937 , 0.33%
DCE Iron Ore ¥524.00 , 0.48%
DCE Coking Coal ¥1,297.00 , 0.93%
DCE Coke ¥2,007.00 , 0.88%
Given the small moves, insignificant compared to what has been seen in prior periods, it provides few clues as to what direction spot markets will travel today.
Futures markets will resume trade at midday AEDT.
While iron ore spot markets have been volatile in the early parts of 2018, analysts at Citibank expect the benchmark price to push over $80 a tonne in before the end of March.
“We are bullish on iron ore for [the March quarter of 2018] and expect prices to rise to over $80 a tonne in the next 1-2 months,” the bank said in a note. “An acceleration of steel mills’ restocking activity around the Chinese New Year should support physical demand for iron ore.”
Over the medium-term, Citi sees the benchmark falling back to $65 a tonne in Q2 before sliding to $60 a tonne in Q3.