Iron ore spot markets fell for a second consecutive session on Wednesday, undermined by weakness in Chinese futures.
According to Metal Bulletin, the price for benchmark 62% fines slid 1.5% to $72.84 a tonne, the largest one-day percentage decline since December 7.
The weakness in the benchmark was mirrored across the grades.
Ore with 65% Fe content also fell 1.5%, settling at $87.60 a tonne. After outperforming on Tuesday, the price of 58% fines slumped, losing 2.6% to $40.79 a tonne.
The across-the-board declines followed another weak session for Chinese rebar and iron ore futures during the session.
The May 2018 rebar contract in Shanghai closed down 0.5% at 3,804 yuan a tonne having hit a two-week low of 3,761 earlier in the session.
The weakness in steel prices flowed through to iron ore futures in Dalian which closed down 0.8% at 529 yuan a tonne.
Some analysts put the weakness down to a continued build in Chinese iron ore port inventories which continued to swell as restrictions on Chinese steel production sapped demand, especially for lower grade ore.
“Because of the environmental programme and the factory shutdowns, the use of iron ore is reduced and stocks at the ports are rising,” an iron ore trader in China’s port city of Rizhao told Reuters.
Last week, iron ore port inventories rose to 143.57 million tonnes, according to SteelHome consultancy, the highest level since records began in 2004.
Despite the earlier losses, and mirroring the price action seen on Tuesday, Chinese rebar futures rose strongly in overnight trade.
SHFE Rebar ¥3,867 , 1.74%
DCE Iron Ore ¥529.00 , 0.38%
DCE Coking Coal ¥1,361.50 , -0.58%
DCE Coke ¥2,072.50 , -1.24%
While iron ore futures were unchanged from the day session close, the strength in rebar contracts provides an early indication that iron ore spot markets may rebound today.
Trade will resume in all commodity contracts at midday AEDT.