After days of relentless selling pressure, culminating in prices falling to a fresh four-month low, it looks like the rout in Chinese iron ore futures is over.
Here’s the scoreboard after two hours of trade on Wednesday.
SHFE Rebar ¥3,636 , 1.08%
DCE Iron Ore ¥436.50 , 2.46%
DCE Coking Coal ¥1,091.00 , 0.83%
DCE Coke ¥1,715.00 , 2.39%
After falling to as low as 421 yuan on Monday, and attempting to break through that level again on Tuesday, the January 2018 iron ore contract is up 2.46% at 436.5 yuan, sitting just below the high of 439 yuan struck earlier in the session.
Rebar, coking coal and coke futures are also pushing higher, suggesting that the move could be driven by profit-taking after days of solid selling.
As seen in the daily chart below, the January 2018 iron ore contract has previously found buying support around these levels.
The Caixin-IHS Markit China manufacturing Purchasing Managers Index (PMI) was released a short time ago, coming in at 51.0 in October, the same level reported in September.
That points to a slight improvement in activity levels from a month earlier.
While that may help to explain the bounce in futures, most of today’s gains came well ahead of its release.
The rebound suggests that spot iron ore markets may follow suit.
On Tuesday, the price for benchmark 62% fines dipped 0.4% to $58.52 a tonne, according to Metal Bulletin, leaving it a fresh four-month low.