Iron ore keeps on falling

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  • Iron ore spot markets fell for a third consecutive session on Monday.
  • The benchmark iron ore price has now fallen in each of the past three sessions, and in 16 of the past 20, leaving it down 19% since March 1.
  • Chinese futures were largely unchanged in overnight trade despite improved investor sentiment towards Chinese and US trade negotiations.

Iron ore spot markets fell again on Monday, albeit by a smaller margin than the losses seen on Friday.

According to Metal Bulletin, the price for benchmark 62% fines slipped 0.4% to $64.33 a tonne, leaving it at the lowest level since November 21.

The benchmark has now fallen in each of the past three sessions, and in 16 of the past 20, leaving it down 19% since March 1.

Larger declines were seen across lower and higher grades during the session.

The price for 58% fines tumbled 2% to $36.43 a tonne while ore with 65% Fe content skidded 1.4% to $80.30 a tonne.

Analysts put the continued losses down to persistent concerns about a potential trade war erupting between the United States and China following the announcement of proposed tariffs from both nations late last week.

“The US and China trade spat has hit hard on commodities, Bai Jing, an analyst with Galaxy Futures in Beijing, told Reuters.

“The market sentiment remains bearish and some steel mills have cut prices, weighing on prices.”

The losses in spot markets followed an unusually quiet session for Chinese futures which finished flat to lower compared to Friday’s night session close.

Iron ore futures in Dalian settled at 439 yuan a tonne, unchanged from Friday’s night session close.

In contrast, rebar, coking coal and coke contracts all fell, closing the session at 3,363 yuan, 1,243.5 yuan and 1,833.5 yuan a tonne respectively, down from 3,370 yuan, 1,251 yuan and 1,865.5 yuan a tonne on Friday.

As seen in the scoreboard below, there was very little movement on those levels in overnight trade with all contracts edging higher during the session.

SHFE Rebar ¥3,369 , 0.15%
DCE Iron Ore ¥440.00 , 0.34%
DCE Coking Coal ¥1,245.50 , 0.32%
DCE Coke ¥1,838.00 , -0.84%

Interestingly, sentiment was not helped by news that rebar inventories held by Chinese traders fell by 3% last week having hit the highest level since April 2013 one week earlier.

Nor were iron ore futures hindered by separate data from Steelhome Consultancy showing iron ore port inventories rose to 160.38 million tonnes over the same period, leaving them at the highest level on record.

The modest moves also stood in stark contrast to the rally seen in US stocks on Monday which was driven by a perceived reduction in the odds of a trade war between the US and China escalating further.

Trade in Chinese commodity futures will resume at midday AEDT.

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