Chinese New Year celebrations will kick off in two week’s time, heralding the start of the week-long Golden Week holiday.
It looks like many iron ore market participants have already taken off.
Nothing much is happening in either spot or futures markets, seemingly winding down before the holiday’s start.
According to Metal Bulletin, the spot price for benchmark 62% fines fell by 0.05% to $72.88 a tonne, extending its losing streak to five sessions.
The small decline followed a 0.07% drop on Wednesday, underlining just how quiet things are at present.
Continuing the trend seen earlier in the week, lower grades continued to outperform in comparison to higher grades during the session.
The price for 58% fines jumped by 2.8% to $42.09 a tonne. In comparison, ore with 65% Fe content fell 0.1% to $88.40 a tonne.
The narrowing in the price spread between lower and higher ores hints that recent declines in steel prices may be prompting mills to use cheaper, less efficient ore rather than more expensive higher grades that deliver better steel yields.
There was little reaction in either spot or futures markets to the release of the Caixin-IHS Markit China manufacturing PMI release for January during the session.
It held at 51.5, indicating that activity levels improved modestly from a month earlier.
Futures markets were also quiet, largely drifting during the session.
Dalian iron ore closed down 1% at 506.5 yuan a tonne while rebar futures in Shanghai went the other direction, rising 0.3% to 3,931 yuan a tonne.
The mixed performance followed renewed speculation that Chinese policymakers may extend steel production curbs to help improve air quality in Northern Chinese provinces over winter.
The cuts are scheduled to end on March 15.
However, as seen in the scoreboard below, both contracts pushed higher in overnight trade.
SHFE Rebar ¥3,950 , 0.23%
DCE Iron Ore ¥516.00 , 1.57%
DCE Coking Coal ¥1,306.50 , 0.97%
DCE Coke ¥2,019.50 , 0.55%
The reversal in iron ore futures coincided with a denial from Hebei’s provincial government, the heart of China’s steel industry, that production cuts has been extended.
Higher steel output usually bodes well for iron ore demand.
Trade in Chinese commodity futures will resume at midday AEDT.