Iron ore prices are still falling

Can’t get through the hurdle. Glyn Kirk / AFP / Getty Images.
  • Iron ore spot and futures markets fell across the board on Friday
  • The price for benchmark 62% iron ore fines slumped by the largest amount since late January
  • Chinese futures continued to weaken in overnight trade on Friday

Iron ore prices continue to weaken.

According to Metal Bulletin, the spot price for benchmark 62% fines 1.2% to $78.43 a tonne, its largest one-day percentage decline since January 30.

It now sits at a two-week low.

Mirroring the performance of the benchmark, both lower and higher grades lost ground during the session.

58% fines slid 0.9% to close at $44.17 a tonne. Ore with +65% Fe fell a little more, declining 1% to $94.40 a tonne.

The weakness followed a reversal in Chinese iron ore futures during the session, something analysts at ANZ Bank put down to renewed concern about the potential impact of US tariffs on the global steel sector.

“Bulks were down sharply as the market reacted to the tariffs that President Trump has threatened to slap on aluminium and steel imports,” the bank said.

“Iron ore futures both in Singapore and China collapsed as traders feared the impact would hit iron ore demand in China.

“The falls in steel futures were a little less severe, with rebar for May delivery down only 0.2% and hot rolled coil down 0.6%.”

The May 2018 rebar contract in Shanghai closed Friday’s day session at 4,024 yuan a tonne, pulling back from the near three-year peak of 4,062 yuan a tonne struck earlier in the session.

Rather than the potential for global trade war, Richard Lu, analyst at CRU consultancy, said the losses in rebar futures largely reflected continued growth in Chinese steel inventories.

“The high steel inventory is weighing on prices at the moment,” he told Reuters.

Rebar inventories swelled to 7.13 million tonnes as at February 23, according to data from SteelHome consultancy, the highest level since March last year.

Lu said this, rather than proposed tariffs as high as 25% on US steel imports, contributed to the decline on Friday.

“Chinese direct steel exports to the US market are very limited,” he said.

Whatever the catalyst, the weakness in rebar futures coincided with losses in Chinese iron ore and coking coal prices during the session.

The May 2018 iron ore contract in Dalian settled at 539 yuan a tonne, down 0.9% from Thursday’s day session close. Coking coal futures also softened, falling 0.6% to 1,394 yuan a tonne.

Coke futures also lost 0.5%, finishing the session at 2,242 yuan a tonne.

Suggesting that losses in spot markets could extend into Monday’s trading session, all four contracts continued to lose ground on Friday evening.

Here’s the final scoreboard.

SHFE Rebar ¥3,972 , -0.92%
DCE Iron Ore ¥531.00 , -1.58%
DCE Coking Coal ¥1,385.00 , 0.14%
DCE Coke ¥2,224.00 , -0.36%

Trade in Chinese commodity futures will resume at midday AEDT.

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