Iron ore prices stabilise after a sharp plunge on Monday

  • Iron ore spot markets rose marginally on Tuesday after falling heavily to start the week.
  • High-grade ores continued to outperform, widening the price premium to low and mid-tier grades.
  • Chinese steel and bulk commodity contracts were quiet in overnight trade, suggesting a quiet start for spot markets on Wednesday.

Iron ore spot markets stabilised on Tuesday after tumbling to a one-month low on Monday.

And with little movement in Chinese steel and bulk commodity futures in overnight trade on Tuesday, all the signs point to a continuation of that trend on Wednesday.

According to Metal Bulletin, the spot price for benchmark 62% fines rose by 4 cents to $65.88 a tonne, finding support following a near-2% decline on Monday.

Small gains were also seen across the grades with 58% fines rising 0.4% to $36.13 a tonne. The price of 65% fines was the standout performer, rising 0.5% to $93.50 a tonne.

“China’s preference for higher grade iron ore continues to support price premiums for high-grade ores over mid-grades,” said Vivek Dhar, Mining and Energy Commodities Analyst at the Commonwealth Bank.

“The preference reflects a drive to reduce emissions and wastage among China’s steel mills.

“Those outcomes are increasingly becoming the focus for Chinese policymakers, where pollution levels continue to determine whether policymakers restrict industrial output.”

The small gains in spot markets coincided with a modest bounce in Chinese rebar futures on Tuesday with the January 2019 contract finishing at 4,232 yuan, up from Monday’s night session close of 4,213 yuan.

That helped to boost coking coal and coke futures traded separately in Dalian which finished trade at 1,272.5 and 2,587 yuan respectively, higher than the previous sessions close.

However, despite the dip-buying seen elsewhere, that didn’t extend through to iron ore futures with the January 2019 contract easing two yuan to 482 yuan.

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

SHFE Rebar ¥4,212 , -0.24%
DCE Iron Ore ¥483.00 , 0.21%
DCE Coking Coal ¥1,261.00 , -0.32%
DCE Coke ¥2,566.50 , 0.82%

The lack of movement suggests spot markets will be quiet on Wednesday, at least in the early parts of the session.

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

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