Iron ore spot markets fell heavily on Thursday following an afternoon of carnage in Chinese commodity futures.
They were whacked, and have been unable to recover any substantial ground in overnight trade.
According to Metal Bulletin, the price for benchmark 62% fines plunged 5.3% to $65.70 a tonne, its largest one-day percentage decline since May 5 this year.
It has now lost 9.6% in the past three sessions.
Just look at the scale of the reversal seen on the daily chart.
While not to the same degree as the benchmark, both lower and higher grade ores lost ground on Thursday.
Ore with 65% Fe content lost 1.5%, finishing the session at $85.30 a tonne. 58% fines fared better, falling just 0.3% to $38.54 a tonne.
The slide in spot markets followed a bloodbath in Chinese futures which tumbled into the close on the back of heavy volumes.
Dalian iron ore futures were smacked, falling 7.5% to 494.5 yuan a tonne. They briefly traded limit down 8% before climbing off the mat in the final throngs of trade.
Coke futures did close limit down 8% at 2,008 yuan a tonne while coking coal tumbled 7.5% to 1,258 yuan a tonne.
Helping to explain the weakness in all three contracts, rebar futures traded separately in Shanghai also came under pressure, finishing the session down 3.2% at 3,828 yuan a tonne.
Many of these contracts hit multi-month highs earlier this week before a sharp reversal on Tuesday kicked off this latest bout of selling pressure. Some put the moves down to bloated iron ore inventories and concerns about near-term steel demand ahead of an expected slowdown in construction activity over the Chinese winter.
However, these same considerations didn’t deter heavy levels of buying just a few days ago.
All things being equal, the recent move looks like it was driven by positioning and speculation rather than any fundamental factors, especially as many of these contracts had put on more than 20% since early October.
As seen in the scoreboard below, the losses from Thursday’s day session were maintained in overnight trade.
SHFE Rebar ¥3,824 , -1.37%
DCE Iron Ore ¥497.50 , -2.93%
DCE Coking Coal ¥1,239.50 , -5.56%
DCE Coke ¥1,995.00 , -5.52%
Trade will resume at midday AEDT, around a hour before the release of Chinese trade data for November which will include information on coal and iron ore imports and steel exports.