Iron ore traders didn't know what to do on Monday

Reisig and Taylor/ABC via Getty ImagesLOST.
  • Iron ore spot closed mixed on Monday despite continued strength in Chinese steel prices.
  • Futures were also indecisive with gains in rebar and coking coal contracts not flowing through to iron ore and coke coke contracts in Dalian.
  • Chinese futures were all weaker in overnight trade on Monday, pointing to a soft start to trade in spot markets on Tuesday.

Iron ore markets were mixed on Monday despite continued strength in Chinese steel prices.

According to Metal Bulletin, the spot price for benchmark 62% fines slipped 1% to $67.81 a tonne, snapping a four-day, 3.7% rally in the process.

However, the weakness in the benchmark did not extend to other grades.

The price of 58% fines actually rallied, lifting 0.9% to $38.99 a tonne, leaving it at the highest level since June 14.

The price of 65% fines weren’t interested in either move, holding steady at $96.40 a tonne.

The mixed performance came despite continued gains in Chinese rebar futures on Monday, again benefiting from optimism that production curbs and strong demand will keep steel prices elevated.

The January 2019 contract closed the session at 4,284 yuan, having traded as high as 4,299 yuan earlier in the day, the loftiest level since August 27. It finished Friday’s night session at 4,240 yuan.

“Environmental inspections in Shanxi province are threatening to disrupt steel production in the region. This saw steel futures in China rise,” said analysts at ANZ Bank.

Despite the strength in steel contracts, that optimism did not flow through to iron ore futures in Dalian which finished at 497.5 yuan, down from from Friday’s night session close of 502 yuan.

Coking coal futures went the other direction, climbing from 1,293 yuan to finish at 1,320 yuan. Coke contracts were largely unchanged from Friday’s night session close, finishing at 2,409 yuan.

While spot and futures markets were mixed to start to week, movements in Chinese commodity futures overnight suggest there could be broad-based losses ahead on Tuesday.

Everything fell, as seen in the scoreboard below.

SHFE Rebar ¥4,176 , -1.83%
DCE Iron Ore ¥494.00 , -0.80%
DCE Coking Coal ¥1,292.00 , -0.15%
DCE Coke ¥2,358.00 , -1.44%

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

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