Iron ore markets consolidate on recent gains

Sean M. Haffey/Getty Images for Rock’n’Roll Marathon
  • Iron ore spot markets consolidated upon recent gains to start the week with small movements recorded across the major grades.
  • Chinese rebar futures hit a three-week high, possibly on the back of continued environmental inspections in the northern Chinese province of Hebei which is dominated by heavy industry. In contrast, bulk commodity contracts softened during the session.
  • Futures were mixed in overnight trade on Monday, offering few clues as to how spot and physical markets may fare on Tuesday. Chinese will release updated consumer and producer price inflation figures for September during the session.

Iron ore spot markets consolidated upon recent gains on Monday with small movements recorded across the major grades.

According to Metal Bulletin, the price for benchmark 62% fines fell one cent to $71.66 a tonne, logging its first daily decline since September 27.

It was obviously a small one.

The modest move in the benchmark was mirrored across the grades. After a strong rebound over the prior four sessions, the price for 58% fines dipped, closing down 0.3% at $41.30 a tonne. The price of 65% Brazilian fines went in the other direction, adding 0.1% to settle at $97.20 a tonne.

The mixed price performance mirrored similar moves in Chinese steel and bulk commodity futures on Monday.

Rebar futures in Shanghai continued to rally, finishing the session at 4,150 yuan, the highest level in close to three weeks. The January 2019 contract closed Friday’s night session at 4,112 yuan.

Hot-rolled coil futures were also bid, finishing trade at 3,968 yuan, up 1.35% from Friday’s day session close.

On Thursday, government officials in China’s Hebei province, dominated by heavy industry, began environmental inspections of industrial plants, adding to speculation it could lead to a reduction in steel production as a consequence.

Steel mills in Tangshan, located in the province, were ordered to halve output for a week when the environmental checks began due to an expectation of adverse weather conditions.

Despite the strength in steel futures, bulk commodity contracts softened, possibly reflecting reduced demand for raw materials as a result of output curbs.

Iron ore futures in Dalian ended trade at 509 yuan, down from the prior night session close of 514 yuan.

Coking coal and coke futures also softened, finishing trade at 1,350.5 and 2,477 yuan respectively, down from 1,368 and 2,529 yuan on Friday evening.

As seen in the scoreboard below, Chinese steel and bulk commodity contracts were mixed in overnight trade on Monday with rebar futures falling modestly, iron ore unchanged while coke and coking coal contracts rebounded modestly.

SHFE Rebar ¥4,132 , 0.02%
DCE Iron Ore ¥509.00 , -0.78%
DCE Coking Coal ¥1,367.00 , 0.26%
DCE Coke ¥2,469.00 , -1.69%

The mixed price performance offers few clues as to how physical markets will perform on Tuesday.

Trade in all Chinese commodity futures will resume at midday AEDT, 30 minutes before China’s government will release updated producer and consumer price inflation data for September.

From a year earlier, producer prices are tipped to rise by 3.5%, down from 4.1% in August, while consumer prices are seen lifting to 2.5%, an acceleration on the 2.3% pace seen in the 12 months to August.

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