Iron ore markets pop higher

Matthew Peyton / Stringer / Getty Images
  • Mid and high iron ore grades rose on Tuesday, masking a slide in less-efficient cheaper grades.
  • The gains came despite continued weakness in Chinese steel futures.
  • Rebar, iron ore, coking coal and coke futures reversed those losses overnight, pointing to a firmer start to trade on Wednesday.

Iron ore spot markets popped higher on Tuesday, led by gains in mid and higher grades.

The price for benchmark 62% fines jumped 1.7% to $66.62 a tonne, according to Metal Bulletin, adding to the gains seen in the prior two sessions.

It’s now risen 2.7% since June 21.

The rebound maintains the pattern seen over the past few months with the benchmark supported on any move back towards $64 a tonne, and sold whenever it tops $68 a tonne.

Like the benchmark, higher grades also bounced with 65% fines adding 0.9% to settle at $90.40 a tonne.

Lower grades, however, went in the other direction with the price for 58% fines sliding 0.8% to $38.27 a tonne.

The strength in higher quality and more expensive grades came despite continued weakness in rebar futures on Tuesday, something that has usually acted to support lower grades in the past.

The October 2018 rebar contract in Shanghai finished the day session at 3,675 yuan, down from Monday’s night session close of 3,699 yuan.

It briefly traded as low as 3,663 yuan, a level not seen since late May.

The weakness flowed through to iron ore, coking coal and coke futures traded on the Dalian Commodities Exchange which finished the session at 462.5, 1,176 and 2,025.5 yuan respectively, all below Monday’s night session close.

“Steel futures were under pressure on news that Canada and the EU were threatening to impose tariffs on steel imports,” said analysts at ANZ Bank.

“The EU trade chief, Cecilia Malmstrom, said that the trading bloc could limit its imports of steel from around the world within weeks.

“This weighed on steel futures in Asia, although it didn’t spread as much to iron ore markets.”

However, as seen in the scoreboard below, those moves were largely reversed in overnight.

SHFE Rebar ¥3,695 , 0.19%
DCE Iron Ore ¥465.50 , 0.65%
DCE Coking Coal ¥1,196.00 , 1.53%
DCE Coke ¥2,053.50 , 0.64%

The modest rebound followed an apparent easing in trade tensions between the United States and China, something that helped to bolster stocks around the world on Tuesday.

The gains point to the likelihood that spot markets may continue to climb today, at least in early trade.

All Chinese commodity futures reopen at 11.am AEST

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