Iron ore gains again as Chinese steel prices surge

Jared C. Tilton/ Getty Images
  • Chinese steel futures surged to multi-year highs on Friday.
  • The strength helped to support mid and high iron ore grades during the session, as well as other bulk commodity prices.
  • Chinese futures held most of their earlier session gains on Friday evening.

Iron ore prices ripped higher on Friday, finding support from continued strength in Chinese steel prices.

According to Metal Bulletin, the spot price for benchmark 62% fines jumped 1.8% to $67.49 a tonne, leaving it at the highest level since June 18.

From July 5, the benchmark has now added close to 7%.

Higher grades performed even stronger than the benchmark with 65% fines surging 2% to settle at $94.10 a tonne.

In contrast, less efficient, lower quality ore lagged the broader move with 58% fines slipping 0.3% to $38.78 a tonne.

Mid and higher grades were likely supported by continued gains in Chinese steel prices on Friday.

Rebar futures in Shanghai closed the day session at 4,126 yuan a tonne, the highest level in over five years.

Analysts put the continued gains down to a combination of strong demand, falling inventory levels and production curbs in Tangshan, a major industrial city in China’s north.

According to Mysteel consultancy, steel inventories held by Chinese traders fell by 104,700 tonnes to 9.89 million tonnes last week. Stocks of rebar fell by 1.8% to 4.48 million tonnes and hot-rolled coil stocks slipped 0.7% to 2.11 million tonnes, the group said.

The strong gains in steel futures flowed through to bulk commodity prices in Dalian.

Iron ore, coking coal and coke futures finished the session at 491.5, 2,221 and 1,195.5 yuan, well above Thursday’s night session close.

As seen in the scoreboard below, all four contracts managed to hold most of those gains in overnight trade on Friday.

SHFE Rebar ¥4,113 , 1.11%
DCE Iron Ore ¥490.50 , 1.03%
DCE Coking Coal ¥1,184.00 , -1.00%
DCE Coke ¥2,218.00 , 1.74%

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

A swathe of Chinese PMI reports will be released this week, starting with official government readings on manufacturing and non-manufacturing sectors on Tuesday.

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