Iron ore prices are still climbing

  • Iron ore spot prices continued to climb on Friday with the benchmark hitting the highest level since the middle of March.
  • Steel futures continued to rebound, supported by temporary production cuts in a major Chinese steel-making city and a draw in Chinese steel inventories.
  • Steel futures continued to rally on Friday evening, helping to support buying in bulk commodity contracts, including iron ore.

Iron ore spot prices continue to climb, underpinned by strength in Chinese steel markets.

According to Metal Bulletin, the price for benchmark 62% fines rose 0.5% to $71.67 a tonne on Friday, leaving it at the highest level since March 15 this year.

Since Chinese financial markets returned from Golden Week holidays on October 8, the benchmark has finished flat-to-higher in each of the past five trading sessions, adding 3.5% in the process.

Modest gains were also recorded across low and higher grades on Friday.

The price for 58% fines added 0.4% to settle at $41.43 a tonne, while 65% Brazilian fines rose by a smaller 0.1% to $97.20 a tonne.

The across-the-board gains were helped by a continued rally in Chinese steel futures during the session.

The most actively-traded January 2019 rebar contract finished at 4,049 yuan, up 0.7% from Thursday’s day session close. The January 2019 hot-rolled coil contract in Shanghai also edged higher, lifting 0.1% to 3,888 yuan over the same period.

Reports that steel mills in Tangshan, China’s largest steel-making city, have been ordered to cut output between October 11 to 18 due to the likelihood of adverse weather conditions likely underpinned the gains in steel markets.

A draw in Chinese steel inventories may have also supported gains in steel futures.

According to data from Mysteel consultancy, steel product inventory held by Chinese traders fell by 193,400 tonnes to 10.65 million tonnes last week, driven by a sharp 3.4% decline in rebar stocks which fell to 4.4 million tonnes.

Perhaps reflecting the prospect of weaker demand from temporary production cuts in Tangshan, iron ore, coking coal and coke futures traded separately in Dalian all softened during the session.

The January 2019 iron ore contract finished trade at 511 yuan, down from Thursday’s night session close of 514 yuan. Coke and coking coal futures also weakened, ending the day at 2,463 yuan and 1,361 yuan respectively, down from the prior night session close of 2,476 yuan and 1,365 yuan.

Data released by the Chinese government on Friday also revealed Chinese iron ore imports rose to 93.47 million tonnes in September, up from 89.35 million tonnes in August.

Despite the mixed news for prices, steel and bulk commodity futures rose again on Friday evening, hinting that spot markets will begin on a firmer footing on Monday.

SHFE Rebar ¥4,112 , 0.66%
DCE Iron Ore ¥514.00 , 0.10%
DCE Coking Coal ¥1,368.00 , -0.07%
DCE Coke ¥2,529.00 , 1.67%

Rebar and coke contracts led the charge higher while iron ore and coking coal futures reversed modest declines seen earlier in the session.

Chinese commodity futures will resume trade at midday AEDT.

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