Iron ore prices are still climbing

JEFF PACHOUD/AFP/Getty Images
  • Iron ore spot markets pushed higher again on Friday, adding to strong gains seen earlier in the week.
  • Chinese rebar inventories fell last week while utilisation rates of blast furnaces at steel mills hit the highest level since mid July.
  • Chinese iron ore imports were relatively unchanged in August compared to the levels of July.

Iron ore spot markets continued to push higher on Friday, adding to gains seen earlier in the week.

Firmer steel prices once again helped to bolster sentiment.

According to Metal Bulletin, the spot price for benchmark 62% fines rose 0.1% to $68.48 a tonne, leaving it at the highest level since August 13.

It’s now risen in each of the past four sessions, adding 3.7% in the process.

Like the benchmark, higher grades also inched higher with the price for 65% fines lifting 0.5% to $96.40 a tonne.

After soaring a session earlier, the price for 58% fines was unchanged at $38.64 a tonne.

The continued gains in mid and higher grades followed earlier strength in Chinese rebar futures traded in Shanghai.

The January 2019 contract finished the session at 4,186 yuan, up 1.5% from Thursday’s day session close. It had been significantly higher earlier in the session and in overnight trade on Thursday.

“Anti-pollution measures in Tangshan came back as the market expected, thus steel output in September is unlikely to see big increase,” analysts at CITIC Futures said in a note seen by Reuters.

Tangshan is a major steel production hub in China.

Like the performance from rebar futures, bulk commodity contracts traded in Dalian also gave back earlier gains to finish the session lower.

Iron ore, coking coal and coke finished the day at 498, 1,273 and 2,349.5 yuan respectively, below Thursday’s night session close of 504.5, 1,287.5 and 2,435 yuan.

However, as seen in the scoreboard below, all four contracts rebounded during overnight trade on Friday.

SHFE Rebar ¥4,240 , 0.71%
DCE Iron Ore ¥502.00 , 0.20%
DCE Coking Coal ¥1,293.00 , 0.90%
DCE Coke ¥2,411.00 , 0.35%

The gains in the bulk commodity contracts, in particular, may have been helped by data from Mysteel consultancy which revealed utilisation rates of blast furnaces at Chinese steel mills rose 0.38 percentage points to 67.54% last week, the highest level since mid July.

Rebar futures may have been supported by a 1.3% decline in trader inventories last week, according to separate data from Mysteel.

The movements in Chinese commodity futures do not incorporate the release of Chinese trade data for August over the weekend. China’s General Administration of Customs said iron ore imports totalled 89.3 million tonnes over August, just below the 89.96 million tonne level of July.

Trade in Chinese commodity futures will resume at 11am AEST, 30 minutes before the government releases consumer and producer price inflation data for August.

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