Iron ore spot markets fell heavily for a second consecutive session on Monday, weighed down by another steep increase in Chinese inventories.
According to Metal Bulletin, the price for benchmark 62% fines fell 1.9% to $76.59 a tonne, adding to the 1.3% drop seen on Friday.
It was the largest one-day percentage decline since December 27 last year.
As was the case on Friday, the weakness in the benchmark was replicated across the grades.
Ore with 65% Fe content slid 1.6% to $92 a tonne while the price of 58% fines fell by a smaller 1.5% to $41.82 a tonne.
Unlike previous bouts of weakness that were driven by softer steel prices, the move on Monday coincided with news that Chinese iron ore port inventories ballooned to the highest level on record last week.
According to data from Shanghai Steelhome, iron ore inventories held at major ports rose by 2 million tonnes to 152.83 million tonnes, the highest level since records began back in 2004.
“Iron ore supplies kept rising and port inventories kept testing records, while scrap supplies are also increasing, so there is no basis for iron ore prices to sustain gains,” Jin Wei, chairman of major Chinese steelmaker Shougang Group, said in an article posted on the China Iron Ore and Steel Association website over the weekend.
That weighed on iron ore futures in Dalian which closed down 2% at 536.5 yuan per tonne. Coking coal and coke futures also fell, sliding 2% and 1.5% respectively to 1,327 and 1,984 yuan a tonne.
In comparison, rebar futures traded separately in Shanghai closed close to flat, finishing the session at 3,802 yuan a tonne, a decrease of 0.1%.
As seen in the scoreboard from Monday’s night session, there was little movement in futures overnight.
SHFE Rebar ¥3,805 , 0.55%
DCE Iron Ore ¥538.00 , 0.00%
DCE Coking Coal ¥1,328.50 , -0.11%
DCE Coke ¥1,988.00 , -0.03%
The lack of movement provides few clues as to what direction iron ore spot markets are likely to travel today.
Trade in all four contracts will resume at midday AEDT.
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