Iron ore markets remain unusually quiet

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  • Iron ore spot markets remain quiet, finishing mixed on Tuesday.
  • The modest moves came despite news of additional fiscal stimulus and a faster rollout of infrastructure projects in China.
  • Chinese commodity futures rose across the board in overnight trade. China’s NDRC said steady inflation would allow for “fine-tuning of monetary policy” in the second half of the year.

Iron ore spot markets remain quiet, showing little reaction to news that Chinese policymakers are moving to shore up economic growth.

The price for benchmark 62% fines slipped 0.3% to $65.57 a tonne, according to Metal Bulletin, pulling back slightly after hitting a one-month high a day earlier.

Higher grade ore also weakened with the price for 65% fines sliding 0.2% to $92 a tonne.

In contrast, lower grade ores continued to outperform, lifting by 0.7% to $38.69 a tonne.

The mixed performance across spot markets followed a Topsy Turvy session in Chinese steel futures on Monday.

Rebar futures in Shanghai topped out at 4,033 yuan — the highest level in close to 11 months — before reversing hard in late trade, eventually closing the session at 3,983 yuan.

The wild swings coincided with the release of mixed news on steel demand.

While China’s State Council announced tax cuts and pledged to speed up infrastructure investment in the second half of the year, designed to prop up flagging economic growth, that may have been offset by data showing Chinese steel stockpiles rose modestly last week.

According to Mysteel consultancy, inventories held by traders rose by 29,500 tonnes to nearly 10 million tonnes last week, indicating a seasonal softening demand that’s often seen during summer.

Despite the reversal in rebar futures during the session, bulk commodity contracts closed flat to higher.

Dalian iron ore finished trade at 474.5 yuan, almost unchanged from Monday’s night session close. Coking coal and coke futures performed a little better, ending trade at 1,178.5 and 2,119 yuan respectively, up from Monday’s night session close of 1,163.5 and 2,101 yuan.

As seen in the scoreboard below, all contracts climbed in overnight trade, hinting that spot markets will begin trade on a stronger footing on Wednesday.

SHFE Rebar ¥3,991 , -0.27%
DCE Iron Ore ¥478.50 , 0.74%
DCE Coking Coal ¥1,209.00 , 3.42%
DCE Coke ¥2,141.50 , 1.69%

On Tuesday, China’s state planner, the National Development and Reform Commission (NDRC), said steady inflation left room for “fine-tuning of monetary policy”, hinting that on top of fiscal easing, policymakers may deliver monetary stimulus in the months ahead, likely another cut to the reserve requirement ratio for banks.

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

The steep decline in Chinese iron ore production over the past year, in one chart

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