Iron ore markets fall again

Photo by Quinn Rooney/Getty Images
  • Iron ore spot markets fell again on Friday, logging the first back-to-back decline in nearly two weeks.
  • Chinese rebar and iron ore futures continued to fall on Friday evening.
  • The US and China concluded “constructive” trade talks over the weekend.

Iron ore spot markets fell again on Friday, logging the first back-to-back decline in nearly two weeks.

According to Metal Bulletin, the price for benchmark 62% fines dipped 0.8% to $88.92 a tonne, leaving it at the lowest level since May 10.

Small losses were also seen across lower and higher grades.

The price of 58% fines slipped 0.4% to $39.42 a tonne, while 65% fines fell 0.7% to $85.80 a tonne.

The weakness in spot markets followed a soft session for Chinese iron ore and rebar future on Friday.

Rebar futures in Shanghai declined 1.2% to 3,631 yuan, contributing to losses in raw materials such as iron ore, coking coal and coke futures.

Dalian iron ore shed 0.7%, finishing Friday’s day session at 478 yuan a tonne.

“Futures on the Dalian Exchange fell in line with losses in steel markets, as reports emerged that steel mills may postpone purchases of iron ore due to uncertainty in downstream demand,” said analysts at ANZ Bank.

“However data was mildly positive.

“Iron ore stockpiles at Chinese ports fell last 0.7% last week to 159 million tonnes, according to Steelhome data.”

As seen in the scoreboard below, both rebar and iron ore continued to slide during Friday’s night session, especially the latter.

SHFE Rebar ¥3,612 , -1.18%
DCE Iron Ore ¥462.50 , -3.75%

While the steep losses in futures suggest spot markets will start off on a weaker footing today, they do not incorporate “constructive” trade negotiations between the United States and China concluded over the weekend.

“With China pledging to reduce its trade surplus with the US, buy more US goods and services and toughen intellectual property laws, a trade war has likely been averted,” says Shane Oliver, Head of Investment Strategy and Chief Economist at AMP Capital.

“This is very positive.

“There is a long way to go to work out the details but it’s clear that the US and China have started a constructive process to resolve their differences and according to Vice Premier Liu have agreed to stop ‘slapping tariffs’ on each other.

“The risk of a growth debilitating trade war between the US and China has now subsided substantially.”

Whether Chinese commodity traders agree with that sentiment won’t be known until all futures contracts open at 11am AEST.

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