Iron ore is getting walloped

Photo by Christian Petersen/Getty Images
  • Iron ore spot markets tumbled across the board on Thursday, driven down by weakness in Chinese steel prices.
  • The benchmark price has now fallen in seven of the past eight trading sessions, losing nearly 8%.
  • Chinese rebar and iron ore futures continued to fall in overnight trade on Thursday.

Iron ore spot markets were hammered on Thursday, logging the largest decline so far in 2018.

And with futures markets falling again overnight, the downdraft may not be over yet.

According to Metal Bulletin, the spot price for benchmark 62% fines tumbled 3.4% to $73.23 a tonne, the largest percentage decline since December 27.

The benchmark price has now fallen in each of the past five sessions, and in seven of the past eight, leaving it sitting at the lowest level since February 1.

It’s now down 7.8% from the multi-month high of $79.39 a tonne level set on March 1.

Both higher and lower grades also skidded lower, albeit not to the same degree as the benchmark.

Ore with 65% Fe content fell 2.9% to $89.80 a tonne. 58% fines fared a little better, only falling 2.5% to $41.78 a tonne.

It was that kind of session.

The losses in spot markets mirrored those in Chinese futures which dived into Thursday’s day session close.

The May 2018 rebar contract in Shanghai slid 3.7%, closing the day at 3,794 yuan a tonne. The weakness in rebar futures flowed through to steel’s raw ingredients — iron ore, coke and coking coal — which also closed deep in the red.

Dalian iron ore fell 3.8% to 500.5 yuan a tonne. Coke and coking coal were also hammered, sliding 3.4% and 3.1% respectively to close at 1,324.5 and 2,112 yuan a tonne.

Analysts were split on what drove the ugly plunge in futures — some pointed to the increased likelihood of steel tariffs on US steel imports, something which has now been implemented, while others said it was due to weak steel demand in China.

Market losses accelerated following the release of Chinese trade data for February, including news that Chinese steel exports and iron ore imports fell from January.

The latter reflects the timing of Lunar New Year holidays in China this year, rather than softer demand.

Whatever the reason, the slide in rebar and iron ore futures continued overnight.

Here’s the scoreboard.

SHFE Rebar ¥3,773 , -2.08%
DCE Iron Ore ¥496.00 , -2.75%
DCE Coking Coal ¥1,328.50 , -0.97%
DCE Coke ¥2,113.00 , -1.03%

While movements in night session trade have not been the best lead indicator recently, the declines suggest the weakness in spot markets may continue today.

Trade in Chinese futures will resume at midday AEDT.

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