Iron ore prices move higher as steel markets strengthen

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  • Iron ore spot prices edged higher on Friday following two days of losses.
  • The price for 58% fines rose to fresh multi-year highs, narrowing the discount to the benchmark price to the smallest level since August 2017.
  • Chinese steel futures rose on Friday, helping to support sentiment across the broader bulk commodity complex.

Iron ore spot prices rose on Friday, helped by strength in Chinese steel markets.

According to Metal Bulletin, the price for benchmark 62% fines increased by 0.1% to $73.45 a tonne, partially reversing declines seen in the prior two sessions.

The gains for higher and lower grade ore were even larger than the benchmark.

The price for 65% Brazilian fines rose 0.6% to $88.20 a tonne, leaving it within touching distance of hitting multi-month highs. 58% fines also gain, lifting by 0.5% to $47.75 a tonne.

The latter now sits at the highest level since September 6, 2017, narrowing its discount to the benchmark to the smallest level since August 22 of that year.

As is often the case, the movement in spot markets mirrored those in Chinese steel futures on Friday.

Rebar futures in Shanghai closed at 3,539 yuan, up from 3,517 yuan on Thursday evening, supported by continued optimism towards US-Sino trade negotiations, temporary industrial production curbs in northern China along with news China’s government will “strictly prohibit” the expansion of new iron and steel projects this year.

The strength in steel futures came despite a continued build in Chinese inventory held by traders, lifting by 453,200 tonnes to 8.83 million tonnes last week, according to data from Mysteel Consultancy.

Coking coal and coke futures also rallied, ending Friday’s day session at 1,233 and 1,982 yuan respectively, helped by speculation over tight supply following the introduction of safety inspections at Chinese mines.

Iron ore futures were the relative laggard for the session, finishing nearly unchanged from Thursday’s night session close.

As seen in the scoreboard below, there was very little movement across steel and bulk commodity futures on Friday evening, providing few clues as to what direction physical markets may move on Monday.

SHFE Hot Rolled Coil ¥3,425 , 0.09%
SHFE Rebar ¥3,530 , 0.34%
DCE Iron Ore ¥506.50 , -0.30%
DCE Coking Coal ¥1,233.50 , 1.82%
DCE Coke ¥1,969.50 , 0.82%

Trade in Chinese futures will resume at midday AEDT.

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