The iron ore rebound just came to a shuddering halt

Massimo Bettiol/Getty Images
  • Iron ore spot markets tumbled on Thursday.
  • The steepest declines were seen in lower grades — those that had previously outperformed.
  • Weaker steel futures and a broader selloff in Chinese markets sparked by the arrest of a senior Chinese business executive in Canada may have contributed to the price reversal.
  • Chinese iron ore futures recovered in overnight trade, finishing above Wednesday’s night session close. Steel futures also recovered ground lost during the day session.

The rally in iron ore markets came to a shuddering halt on Thursday with steep declines recorded across all grades.

According to Metal Bulletin, the spot price for benchmark 62% fines slipped 1.2% to $66.59 a tonne, snapping a three-day winning streak in the process.

The benchmark had rallied in six of the past seven sessions prior to Thursday’s fall.

After outperforming in recent days, high-flying 58% fines succumbed to profit-taking, slumping 2.1% to settle $42.45 a tonne.

The price for 65% Brazilian fines also softened, sliding 0.8% to $82.70 a tonne.

The reversal coincided with weakness in Chinese steel futures during the session, dragging bulk commodity contracts lower.

A broader selloff in Chinese financial markets, sparked by the arrest of a senior Chinese business executive by Canadian authorities on behalf of the US government, may have also contributed to the decline in commodity futures markets on Thursday.

However, after sliding in day trade, those losses were either trimmed or reversed during Thursday’s night session.

SHFE Hot Rolled Coil ¥3,627 , -0.82%
SHFE Rebar ¥3,714 , -1.07%
DCE Iron Ore ¥508.00 , 0.30%
DCE Coking Coal ¥1,425.50 , 0.99%
DCE Coke ¥2,326.50 , 0.06%

Having closed at 507 and 1,411.5 yuan respectively on Wednesday evening, the January 2019 iron ore and coking coal contracts edged higher. In contrast, rebar, hot-rolled coil and coke futures weakened from 3,761, 3,663 and 2,330.5 yuan respectively over the same period.

The mixed price performance provides few clues as to what direction spot markets are likely to move on Friday.

Trade in Chinese commodity futures will resume at midday AEDT.

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