The early indications suggest it'll be a good day for iron ore

Iron ore spot markets finished mixed on Wednesday with lower grades outperforming higher grades during the session.

According to Metal Bulletin, the price for benchmark 62% fines dipped 0.6% to $62.26 a tonne, adding to the 1.1% decline recorded on Tuesday.

Ore with 65% Fe content also softened, falling 0.1% to $82.70 a tonne.

Lower grades bucked the trend with the price for 58% fines rising 0.5% to $63.30 a tonne.

The mixed performance followed the release of Chinese trade data for October, including news that iron ore imports fell to the lowest level since February 2016.

According to China’s General Administration of Customs, imports dipped to 79.49 million tonnes, down from the record-high level of 102.83 million tonnes set a month earlier.

Analysts put the weakness down to higher inventory levels and softer demand ahead of the full implementation of steel production curbs in mid-November.

“I think imports will remain relatively low (for November and December), but maybe not as low as October. Given the production cuts and the very high port stocks at the moment, I don’t think there’s very strong demand,” Wang Di, consultant at CRU in Beijing, told Reuters.

Despite the softness in spot markets, Chinese futures continued to push higher in overnight trade, providing an early indication that physical markets may reverse course on Thursday.

Iron ore futures in Dalian rose by 1.7% to 474 yuan, the highest level since September 28. That was also an improvement on the 466 yuan level it finished Wednesday’s day session.

Rebar, coking coal and coke contracts also rose, closing above the 3,724 yuan, 1185.5 yuan and 1,867.5 yuan levels they finished the previous session.

SHFE Rebar ¥3,789 , 2.27%
DCE Iron Ore ¥474.00 , 1.72%
DCE Coking Coal ¥1,232.00 , 4.19%
DCE Coke ¥1,923.00 , 4.62%

Trade in Chinese commodity futures will resume at midday AEDT, 30 minutes before the release of Chinese consumer and producer price inflation figures for October.

If recent history is any guide, commodity futures will likely be influenced by the PPI release. It’s expected to have risen by 6.6% from a year earlier, down from 6.9% in September.

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