Iron ore's winning streak is over

Photo: Dean Mouhtaropoulos/Getty Images.

Iron ore’s longest winning streak since June last year is over.

According to Metal Bulletin, the spot price for benchmark 62% fines fell 1.1% to $76.46 a tonne on Thursday, snapping a five-session, 6.1% winning streak in the process.

It was the equal-longest streak without a decline since the middle of June last year.

Like the benchmark, losses were recorded across both lower and higher grades.

58% fines slid 2.1% to $43.38 a tonne while ore with 65% Fe content fell by a smaller 0.3% to $93.20 a tonne.

The losses followed weakness in Chinese rebar futures during the session.

The May 2018 rebar contract in Shanghai lost 0.92%, settling at 3,895 yuan a tonne.

There was little reaction to news that Tangshan, a major steel producing city in Northern China, announced an extension to steel output restrictions beyond an earlier deadline of March 15.

“Among the extended measures announced, eight steel mills located near the city centre, including the main site of Tangsteel, a unit of HBIS Group, will face unspecified ‘normalized’ production limits after March 15,” said Reuters, citing a document posted on the the Tangshan government’s website.

“Other steel mills be will required to stagger their production when instructed to by the city government, which did not say when the extended curbs would end.”

Steel production curbs were introduced across many northern Chinese provinces in November in an attempt to improve air quality during winter.

Usually the announcement of further production curbs helps to underpin steel prices as seen on countless occasions over recent years.

Nor was there much reaction in Chinese iron ore futures which have also been influenced by such announcements in the past.

Iron ore futures in Dalian finished Friday’s day session close to where they started at 523.5 yuan a tonne.

Coke and coking coal futures did weaken during the session, partially reversing some of the strength seen earlier in the week.

The former closed down 1.91% at 2,105.5 yuan while coking coal finished at 1,356 yuan a tonne, a decline of 0.5%.

As seen in the scoreboard below, all four contracts added to those losses in overnight trade on Friday.

SHFE Rebar ¥3,887 , -0.61%
DCE Iron Ore ¥521.50 , -1.23%
DCE Coking Coal ¥1,348.50 , -0.95%
DCE Coke ¥2,094.50 , -1.48%

The lack of movement in futures partially reflects the start of Chinese Lunar New Year celebrations that will begin on Thursday, seeing activity in physical and paper markets dry up as million of Chinese go on holidays.

That means that any movements seen this week are unlikely to give a true read on underlying demand.

For those who are still active in the market, Chinese commodity futures will resume at midday AEDT.

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