Lower grade iron ore prices have taken a bath

Stephen Morton/Getty ImagesSplat!
  • Iron ore spot markets are trading mixed with strength in the benchmark masking losses across higher and lower grades.
  • There were more temporary steel output restrictions announced in China late last week. Iron ore port inventories also increased.
  • Steel and rebar futures weakend in overnight trade, pointing to a soft start for spot markets on Tuesday.

Iron ore markets diverged on Monday as strength in the benchmark masked losses across lower and higher grades.

According to Metal Bulletin, the spot price for benchmark 62% fines rose 0.8% to $64.56 a tonne, leaving it at the highest level since June 29.

However, the gains in the benchmark were the exception to the rule on Monday.

The price of 65% fines slid 0.2% to $91.10 a tonne, outpaced by an ugly 2.2% plunge in the price for 58% fines which settled at $36.70 a tonne.

The mixed performance across spot markets coincided with news that officials in Tangshan, an major steel producing centre in China, have ordered steel mills to cease using sintering plants until July 18 in anticipation of adverse weather conditions, raising short-term concern about the demand outlook for iron ore fines.

Data from Mysteel consultancy revealing Chinese iron ore port inventories increased marginally last week may have also weighed on prices, particularly lower grades given the ongoing push to curb environmental damage caused by steel production.

There was little reaction to the release of Chinese Q2 GDP data during the session, nor news that average daily steel output in China rose to the highest level since 2014 in June, according to calculations by Reuters.

After finishing Friday’s night session at 3,959 yuan, rebar futures closed Monday’s day session largely unchanged at 3,958 yuan a tonne.

Movements across the bulks were also small with Dalian iron ore futures finishing trade at 466 yuan, up two yuan from Friday’s closing level.

Coking coal and coke futures finished trade at 1,138.5 and 2,001.5 yuan respectively. The former rose marginally while the latter lost ground during the session.

As seen in the scoreboard below, Shanghai rebar continued to weaken in overnight trade, dragging most bulk commodity contracts lower for the session.

SHFE Rebar ¥3,930 , -0.78%
DCE Iron Ore ¥463.50 , -0.22%
DCE Coking Coal ¥1,139.50 , 0.35%
DCE Coke ¥2,000.00 , -0.37%

The moves suggest iron ore spot markets may start off on a softer footing today.

Trade in Chinese futures will resume at 11am AEST.

China’s statistic agency will release data on new home prices in June at 11.30am AEST.

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