Now lower grade iron ore prices are surging

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  • Lower grade iron ore prices surged on Friday, joining the rally in higher grades that began late last week.
  • Inventories of imported iron ore held by Chinese steel mills fell to the lowest level in a year during November. Chinese iron ore output also fell by 1.1% in November compared to the levels of a year earlier.
  • The Chinese president will speak today, an event that could prove influential on commodity prices later in the session.

  • Lower grade iron ore prices surged on Monday, belatedly joining the rally in higher grades late last week.

    According to Metal Bulletin, the spot price for benchmark 62% fines fell 0.4% to $70.47 a tonne. The price for 65% Brazilian fines held steady at $85.30 a tonne.

    They previously jumped by 4.6% and 2.2% respectively on Friday.

    After tumbling by 1.2% late last week, the price for 58% fines reversed that loss and then some on Monday, jumping 3.4% to $44.17 a tonne, leaving it at the highest level since November 21.

    The mixed price performance followed data from Mysteel Consultancy that revealed imported iron ore inventories held by Chinese steel mills fell to the lowest level since November 2017 last week.

    Separate data from China’s National Bureau of Statistics (NBS) also showed Chinese iron ore output stood at 68.89 million tonnes in November, down 1.1% from a year earlier.

    Lower grade iron ore prices may have been supported by a reversal in Chinese steel futures which up earlier gains to finish lower for the session.

    That move continued in overnight trade on Monday, weighing on bulk commodity contracts traded separately in Dalian.

    SHFE Hot Rolled Coil ¥3,435 , -0.20%
    SHFE Rebar ¥3,427 , -0.29%
    DCE Iron Ore ¥485.00 , -0.61%
    DCE Coking Coal ¥1,239.00 , -0.60%
    DCE Coke ¥2,013.50 , -0.79%

    Rebar, hot-rolled coil, iron ore, coking coal and coke futures previously closed at 3,461, 3,462, 491, 1,252.5 and 2,034 yuan respectively on Friday evening.

    The pullback in futures points to a soft start to trade in spot markets on Tuesday.

    Of note, Chinese President Xi Jinping will deliver a speech on Tuesday ahead of the government’s Central Economic Work Conference (CEWC) that is expected to begin on Wednesday.

    That could prove to be influential on Chinese commodity futures when they resume trade at midday AEDT.

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