Iron ore ignored the carnage seen in Chinese stocks

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  • Iron ore spot and futures markets finished mixed on Thursday, ignoring the carnage seen in other asset classes.
  • Prices for low and mid-tier iron ore grades pushed slightly higher, while those for higher grade softened.
  • Chinese steel and bulk commodity futures finished flat to higher in overnight trade on Thursday, likely helped by reports of temporary steel production cuts in the Chinese city if Tangshan. China will release trade data for September later in the session.

Iron ore spot and futures markets finished mixed on Thursday, ignoring the carnage seen in other asset classes, including commodity markets.

According to Metal Bulletin, the spot price for benchmark 62% fines rose 0.2% to $71.30 a tonne, settling at the highest level since March this year.

Lower grade ores also inched higher, adding to the rebound seen in the prior two sessions. 58% fine added 0.3% to close at $41.25 a tonne.

Higher grade ore went in the other direction with the price of 65% Brazilian fines slipping 0.3% to $97.10 a tonne, partially reversing gains achieved earlier in the week.

The mixed and somewhat resilient performance from spot markets mirrored the price action in Chinese steel and bulk commodity futures which managed to trim earlier losses in the latter part of Thursday’s trading session.

Rebar futures in Shanghai finished at 4,056 yuan, recovering after tumbling to as low as 3,958 yuan earlier in the session. It closed Wednesday’s night session at 4,007 yuan.

Hot-rolled coil futures also recovered after steep losses earlier in the day, rising from a session low of 3,831 yuan to end trade at 3,909 yuan.

The rebound in steel futures helped support continued dip-buying in iron ore, coking coal and coal contracts traded separately in Dalian.

The January 2019 iron ore contract finished at 511.5 yuan, down marginally from Wednesday’s night session close of 513.5 yuan.

Coking coal futures were near unchanged from the prior close, finishing at 1,366.5 yuan. Coke futures continued to be supported by supply-side concerns, ending trade at 2455 yuan, up marginally from the prior close of 2,453.5 yuan.

The modest movement in steel and bulk commodity contracts were in stark contrast to the bloodbath recorded in Chinese stocks on Thursday with the benchmark Shanghai Composite index tumbling 5.22%, the largest one-day percentage fall since February 2016.

Continuing the resilience seen earlier in the session, most contracts continued to grind higher in overnight trade on Thursday.

SHFE Rebar ¥4,069 , 1.17%
DCE Iron Ore ¥514.00 , 0.39%
DCE Coking Coal ¥1,365.00 , 0.22%
DCE Coke ¥2,476.00 , 1.12%

Rebar, iron ore and coke futures all pushed higher, while coking coal contracts were largely steady, possibly helped by reports that steel mills in Tangshan, China’s largest steel-making city, have been ordered to cut output by half this week due to the likelihood of adverse weather conditions, according to an official document seen by Reuters.

Trade in Chinese steel and bulk commodity futures will resume at midday AEDT, ahead of the release of official Chinese trade data for September later in the session.

There’s no set time for the release, but based on prior form, it will likely arrive after 2pm AEDT.

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