Iron ore prices slump

Matt Cardy/Getty ImagesSpeculative long positioning in steel futures is being unwound. Rapidly.
  • Iron ore spot prices fell heavily across the broad on Monday.
  • The benchmark price slumped nearly 2%, leaving it at a one-month low.
  • The slide coincided with continued selling in Chinese steel futures, possibly reflecting an unwind of bullish market positioning.

Iron ore spot markets fell heavily across the board on Monday, reversing all of Friday’s gains, and more, to close at fresh one-month lows.

According to Metal Bulletin, the price for benchmark 62% fines skidded 1.8% to $65.84 a tonne, logging its third fall in the past four sessions.

It now sits at the lowest level since July 24, and has shed 5.6% since August 8.

Large gains were also recorded across lower and higher grades during the session.

The price for 58% fines fell 1.2% to $35.97 a tonne, outpacing a 0.9% drop for 65% fines which settled at $93 a tonne.

Ongoing weakness in steel prices was cited as a factor behind the slide.

“Steel prices have certainly been supported by production restrictions amid the anti-pollution campaign. But the impact of previous measures has already been digested by the market, and investors are waiting to see if there are any further moves,” an unnamed Shanghai-based steel trader told Reuters.

Prior to the recent weakness, Chinese steel prices had been rallying on expectation that production curbs in China’s top steel-making city, Tangshan, would be extended further.

They’re currently scheduled to end on Friday.

Reflecting of an unwind in speculative long positioning, rebar futures in Shanghai fell for a fourth consecutive session, finishing trade at 4,204 yuan, down sharply from Friday’s night session close of 4,316 yuan.

“Steel futures markets in China were weaker as investors continued to take profits after reaching record high levels last week,” said analysts at ANZ Bank.

“Trade tensions were also high with President Trump calling off talks with China following little progress between the two.”

The weakness in steel markets flowed through to bulk commodity contracts with iron ore, coke and coking coal futures traded separately in Dalian closing the day at 476.5, 2,517 and 1,262 yuan respectively.

That was down from the prior sessions close of 490.5, 2,543.5 and 1,284.5 yuan respectively.

However, after tumbling sharply during the day session, all four contracts clawed back ground in overnight trade.

Here’s the closing scoreboard from Monday’s night session.

SHFE Rebar ¥4,213 , -1.13%
DCE Iron Ore ¥484.00 , -0.10%
DCE Coking Coal ¥1,261.50 , -1.18%
DCE Coke ¥2,512.00 , -0.57%

The modest rebound also came before news broke over a trade breakthrough struck between the United States and Mexico, hinting the move was largely domestically driven.

Trade in Chinese commodity futures will resume at 11am AEST.

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