Iron ore markets lift again

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  • Iron ore spot markets rose for a second consecutive session on Thursday, reversing losses earlier in the week.
  • Macquarie Bank expects Chinese steel demand will strengthen in the coming weeks, helping to support steel, iron ore and coking coal prices.
  • Chinese iron ore and rebar futures were softer in overnight trade.

Iron ore markets rose again on Thursday.

According to Metal Bulletin, the spot price for benchmark 62% fines increased by 0.7% to $72.11 a tonne, extending the rally from Wednesday when it surged by 2.7%.

Lower grades rose by a smaller amount with 58% fines ticking up to $41.21 a tonne, up 0.4% for the session.

Higher grades were the relative underachiever for the session.

Ore with 65% Fe content was flat at $88.20 a tonne.

The modest gains mirrored a similar performance in Chinese futures on Thursday.

The May 2018 rebar contract in Shanghai added 1.2% to close at 3,752 yuan a tonne, moving further away from multi-month lows struck earlier this week.

In note released earlier this week, analysts at Macquarie Bank expressed confidence that demand for construction steel would begin to pickup over the next two weeks, resulting in falling inventories and renewed support for prices.

The strength in rebar futures helped to support iron ore and coking coal futures during the session.

Iron ore futures finished at 490 yuan, up from Wednesday’s night session close of 487.5 yuan a tonne. Coking coal future were also largely unchanged, closing at 1,285 yuan a tonne.

As seen in the scoreboard below, those contracts put in a mixed performance during Thursday’s night session.

SHFE Rebar ¥3,731 , -0.45%
DCE Iron Ore ¥484.00 , -1.12%
DCE Coking Coal ¥1,289.00 , 0.19%
DCE Coke ¥1,990.50 , -0.38%

Both rebar and iron ore futures closed off their earlier session highs, hinting that recent strength in spot markets may reverse today.

Movements in overnight trade have not been reliable in predicting what direction spot markets will travel in recent weeks.

All Chinese commodity futures contracts will resume at midday AEDT.

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