- Iron ore markets continued to push higher on Thursday, supported by ongoing strength in Chinese steel prices.
- Environmental inspections in several Chinese provinces has lead to speculation that steel output may be curbed.
- Chinese rebar and iron ore futures closed marginally lower overnight, extending the reversal see during Thursday’s day session.
Iron ore markets continued to push higher on Thursday, supported by ongoing strength in Chinese steel prices.
The spot price for benchmark 62% fines rose by 0.4% to $66.84 a tonne, according to Metal Bulletin, extending its winning streak into a third consecutive session.
After lagging the broader rally in previous sessions, lower grades outperformed on Thursday with 58% fines jumping 1.3% to $39.06 a tonne.
In contrast, higher grades went nowhere with 65% fines closing flat at $87.60 a tonne.
The modest gains were helped by strength in Chinese steel prices as market participants speculated that ongoing environmental inspections could lead to reduced steel output.
Reuters reports that teams of inspectors have been sent to six Chinese regions, including the steelmaking hubs of Hebei and Jiangsu provinces, to review environmental violations that were found during the checks last year.
The news, which comes alongside continued draws in Chinese steel inventories, helped to propel rebar futures higher in Shanghai.
The October 2018 contract finished trade at 3,807 yuan, up marginally from Wednesday’s night session close of 3,803 yuan. It briefly traded at 3,869 yuan, a level last seen in early March.
Mirroring the price action in rebar futures, iron ore contracts also gave back earlier gains to finish the session marginally lower.
The September 2018 contract finished at 469 yuan a tonne, down from Wednesday’s night session close of 474 yuan a tonne.
As seen in the scoreboard below, the reversal in rebar and iron ore futures extended in overnight trade.
SHFE Rebar ¥3,798 , -0.55%
DCE Iron Ore ¥467.50 , -1.06%
DCE Coking Coal ¥1,259.00 , 0.56%
DCE Coke ¥2,089.50 , 1.41%
The modest declines suggest spot markets may start off on a softer footing on Friday.
Trade in Chinese commodity futures will resume at 11am AEST.
Of note, China will release trade data for May later in the session, including news on iron ore imports.