Iron ore is getting hosed

Lam Yik Fei/Getty Images
  • Iron ore spot prices were smoked on Thursday.
  • The price for benchmark and 58% fines sits at a one-month low. The price for 65% fines at a five-month low.
  • Bulk commodity futures eased on Thursday evening, pointing to the possibility of further weakness in spot markets on Friday.

Iron ore prices were hosed on Thursday, falling heavily across the board.

According to Metal Bulletin, the spot price for benchmark 62% fines slumped 2.5% to $72.18 a tonne, adding to the declines seen in the prior two sessions.

The fall was the largest in percentage terms since June 27, and left the benchmark at the lowest level in over a month.

Large falls were also seen across lower and higher grades on Thursday.

58% fines tumbled 2.9% to $43.47 a tonne, its largest one-day percentage decline since August 21. 65% Brazilian fines fell by a slightly smaller 2.1% to $90.70 a tonne, extending its drop from late October to over 8%.

The price of 58% fines now sits at a one-month low. For 65% fines, it’s a five-month low.

The sharp falls followed the release of data showing iron ore exports from Australia’s Port Hedland rebounded last week after temporary supply disruptions earlier in the month.

“Iron ore exports from Port Hedland rose to 16.4 million tonnes last week, up from 14.3 million tonne the previous week,” said strategists at ANZ Bank.

The weakness in spot markets came despite a far more resilient performance from futures markets on Thursday.

Rebar futures in Shanghai rose to 3,729 yuan, up from 3,715 on Wednesday evening. In contrast, hot-rolled coil futures eased a touch after rallying hard on Wednesday, finishing at 3,591 yuan, down from the prior close of 3,606 yuan.

The resilience in steel contracts was put down to temporary output restrictions introduced in the Chinese province of Hebei, China’s largest steel-making centre.

Bulk commodity contracts in Dalian also managed to cling onto the strong gains recorded a session earlier.

Iron ore, coking coal and coke futures finished trade at 518.5, 1,364 and 2,266 yuan respectively, down from 521.5, 1,366.5 and 2,274.5 yuan on Wednesday evening.

As seen in the scoreboard below, apart from rebar futures that closed flat, all other contracts fell in overnight trade on Thursday.

SHFE Hot Rolled Coil ¥3,562 , -1.49%
SHFE Rebar ¥3,730 , 0.27%
DCE Iron Ore ¥510.50 , -2.02%
DCE Coking Coal ¥1,351.50 , -0.95%
DCE Coke ¥2,237.00 , -1.52%

While futures have not been the best guide for movements in spot and physical markets recently, the losses point to the possibility of further weakness on Friday.

Futures will resume at midday AEDT.

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