Iron ore prices continue to march higher

Kevin Frayer/Getty Images
  • Iron ore spot markets continue to surge, closing at fresh highs on Tuesday.
  • The gains came despite a mixed performance from Chinese steel and bulk commodity futures, as well as another plunge in Chinese stocks.
  • Chinese futures were quiet in overnight trade, offering few clues as to what will be seen on Wednesday.

Iron ore prices continue to rally, closing at fresh multi-month highs on Tuesday.

According to Metal Bulletin, the spot price for benchmark 62% fines rose by a further 0.7% to $74.31 a tonne, extending its surge from July 5 — the year-to-date low — to 17.7%.

It now sits at the highest level since early March having added 7.3% since the end of Gold Week holidays earlier this month.

Mirroring the performance of the benchmark, lower grade ores also jumped with the price of 58% fines climbing 1.4% to $43.85 a tonne, again, the highest level since early March.

After settling at the highest level in over a year on Monday, the price for 65% Brazilian fines dipped slightly, falling 0.6% to $97.70 a tonne.

The strength across mid and lower grades came despite a mixed performance from Chinese steel and bulk commodity futures on Tuesday.

Rebar futures in Shanghai finished trade at 4,142 yuan, down from Monday’s night session close of 4,168 yuan. Despite the modest dip, steel prices remain near multi-month highs, supported by ongoing signs of strong demand.

According to Mysteel consultancy, Chinese steel inventories held by traders fell by 370,000 tonnes to 10.3 million tonnes last week. The group said rebar inventory slumped by 6.4% to 4.12 million tonnes, offsetting a small increase in stockpiles of hot-rolled coil product.

In September, China crude steel production stood at 80.85 million tonnes, according to China’s National Bureau of Statistics, near the record level of 81.241 million tonnes set to months earlier.

The weakness in steel contracts flowed through to iron ore futures in Dalian which dipped to 519.5 yuan, down 5.5 yuan from the close on Monday evening.

In contrast, coking coal and coke futures in Dalian pushed higher, finishing the day session at 1,388.5 yuan and 2,378 yuan respectively, up from the prior close of 1,372.5 yuan and 2,368.5 yuan.

According to Reuters, citing local media reports, authorities in China’s Shandong province ordered 41 coal mines to halt production for security checks, potentially cutting coal mining capacity in the region by 89.81 million tonnes per year.

As seen in the scoreboard below, there was very little movement upon those levels in overnight trade on Tuesday.

SHFE Rebar ¥4,143 , -0.26%
DCE Iron Ore ¥522.50 , 0.00%
DCE Coking Coal ¥1,379.00 , -0.11%
DCE Coke ¥2,384.50 , 0.48%

The mixed performance provides few clues as to what direction spot markets are likely to head in early deals on Wednesday.

Chinese commodity futures will resume trade at midday AEDT.

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