Iron ore snaps its losing streak -- and it looks like there's more gains to come

Mark Kolbe/Getty Images
  • Iron ore spot markets rebounded modestly on Friday following several days of losses.
  • The gains were led by higher and mid grades, masking weakness in lower grades. This came despite continued weakness in Chinese steel markets.
  • Futures rallied in overnight trade on Friday, led by iron ore futures in Dalian.

Iron ore spot markets rebounded modestly on Friday following several days of losses.

The gains were led by mid and higher grades.

And with Dalian iron ore futures rallying hard on Friday evening, it suggests there may be further gains to come today.

According to Metal Bulletin, the spot price for benchmark 62% fines rose 0.7% to $65.34 a tonne, snapping a three-day, 5.3% slide in the process.

The gains in higher grades were even larger with the price for 65% fines surging 2.2% to $89.60 a tonne.

Lower grades, in contrast, underperformed with 58% fines falling one cent to $38.57 a tonne.

The strength in mid and higher grades came despite ongoing weakness in Chinese rebar futures, something that has usually helped to boost cheaper, less efficient, ores in the past.

Higher grades have been favoured in recent months due to high profitability levels at Chinese steel mills and a push from policymakers to improve air quality in northern provinces.

Rebar futures in Shanghai finished Friday’s day session at 3,760 yuan, down marginally from Thursday’s night session close of 3,768 yuan.

Iron ore and coking coal futures in Dalian bucked the trend, recording small gains for the session.

Iron ore finished at 457.5 yuan, up from the prior close of 455.5 yuan. Coking coal also inched higher, finishing Friday’s day session at 1,184 yuan.

As seen in the scoreboard below, rebar futures managed to crawl higher on Friday evening while iron ore future soared.

SHFE Rebar ¥3,772 , 0.24%
DCE Iron Ore ¥468.00 , 2.86%
DCE Coking Coal ¥1,213.50 , 3.01%
DCE Coke ¥2,131.50 , 0.66%

The strength in futures suggests spot iron ore markets will start off on a stronger footing today.

Trade in all Chinese commodity futures will resume at 11am AEST.

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