It looks like iron ore's winning streak is over as futures go hard into reverse

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Iron ore made it three gains on the trot on Monday, adding to the substantial gains achieved over the prior two sessions.

However, with Chinese futures tumbling in overnight trade, it looks like the winning streak may now be over.

According to Metal Bulletin, the spot price for benchmark 62% fines rose 0.7% to $62.94 a tonne, extending its gain from Wednesday last week to 5.6%.

Lower grades outperformed the benchmark during the session with the price for 58% fines jumping 1.5% to $37.60 a tonne.

Higher grades were the laggard, bucking the trend seen in recent weeks. Ore with 65% Fe content added 0.1% to $85.80 a tonne.

The modest gains mirrored the fortunes of Chinese iron ore and rebar futures which opened near their highs before slowly giving back ground as the session progressed.

The January 2018 rebar contract in Shanghai closed up 2.9% at 3,824 yuan, pulling back from a one-month high of 3,878 struck earlier in the session. Iron ore futures in Dalian also closed off their highs, finishing the session up 3.8% at 463 yuan.

As was the case in the previous two sessions, the strength in iron ore and coking coal contracts was underpinned by strong gains in rebar futures, helping to bolster the view that elevated margins will encourage Chinese steel mills to ramp up production ahead of looming output curbs in mid-November.

However, as seen in the scoreboard below, that view was all but reversed in overnight trade, replaced by ongoing concerns that output cuts will dent demand for steel’s raw ingredients.

SHFE Rebar ¥3,741 , -1.89%
DCE Iron Ore ¥449.00 , -2.50%
DCE Coking Coal ¥1,153.00 , -2.86%
DCE Coke ¥1,815.50 , -5.49%

The losses in futures, if sustained, suggest that the winning streak for iron ore spot markets will likely end at three in the absence of a substantial turnaround over the course of Tuesday’s session.

Trade in Chinese futures will resume at midday AEDT.

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