Iron ore prices finished mixed on Thursday with a bounce in the benchmark price offset by continued weakness in higher and lower grades.
However, with Chinese rebar and iron ore futures up strongly overnight, it suggests the selloff seen in recent weeks may have run its course, at least in the short-term.
According to Metal Bulletin, the spot price for benchmark 62% fines rose 0.7% to $60.09 a tonne, rebounding modestly after two days of heavy losses.
It’s first foray below $60 a tonne since late June didn’t last long, although some still believe that there’ll be further downside to come in the weeks ahead.
Indeed, despite the bounce in the benchmark price, both lower and higher grades fell heavily over the session.
The price for 58% fines slumped 1.9% to $35.30 a tonne, leaving it at the lowest level since January 2016.
Higher grades were also hammered with ore with 65% Fe content tumbling 2.6% to $83 a tonne. It too sits at lows not see since mid-July having lost 19% since August 22.
Given the weakness across other grades, it creates some doubt as to whether the bounce in the benchmark price will be sustained in the sessions ahead.
If the lead provided by Chinese futures is to be believed, it appears likely that it will.
After plumbing fresh multi-month lows on Thursday, rebar futures rocketed higher in the latter part of the session on news that authorities in Tangshan, a major steel producing city in the northern province of Hebei, ordered steel mills operating in the city to reduce output a month ahead of schedule in order to improve air quality.
Previously steel production cuts were only slated to begin from mid-November.
The news saw rebar futures rocket higher on supply concerns, dragging iron ore and coking coal futures sharply higher as a result. The gains in the latter came despite the prospect that an earlier shutdown of production capacity will almost certainly reduce demand for raw materials.
The January 2018 rebar future in Shanghai added 2.8%, closing the day session at 3,667 yuan. The January 2018 iron ore future in Dalian also spiked on the news, recovering from early losses to close at 441.5 yuan, up 0.3% for the session.
And, as seen in the scoreboard below, those gains were built up on in overnight trade.
SHFE Rebar ¥3,690 , 3.10%
DCE Iron Ore ¥445.00 , 2.65%
DCE Coking Coal ¥1,163.00 , 4.45%
DCE Coke ¥1,840.00 , 2.31%
Trade in Chinese commodity futures will resume at midday AEDT, around a hour before the release of Chinese trade figures for September.
According to economists, exports are expected to have risen 8.8% over the year, up from 5.5% in August. Imports are tipped to have grown 13.5% over the same period, up fractionally on the 13.3% pace reported previously.
If the recent trend in Chinese data continues, it’s likely that the risks to these forecasts are on the upside.
There’s no set time for the release, although the data tends to be drip-fed through from around 1pm AEST.