Iron ore prices slumped on Friday, but it looks like the weakness will be reversed today

Photo by Jonathan Ferrey/Getty Images

The sharp, choppy movements in spot iron ore markets continued on Friday, this time to the downside.

But with Chinese futures up sharply on Friday evening, it suggests that move be unwound on Monday.

According to Metal Bulletin, the spot price for benchmark 62% fines fell by 1.13% to $91.32 a tonne. It was the third decline in the past four sessions, and trimmed its year-to-date advance to 15.8%.

The losses were smaller for higher grades but significantly larger for lower grade ores. The spot price for 58% fines slumped 3.56% to $62.89 a tonne.

Analyst at Metal Bulletin said that the weakness followed a retreat in Chinese rebar prices as volumes thinned ahead of China’s National People’s Congress on the weekend.

However, those moves reversed course on Friday evening with strong gains recorded across Chinese iron ore, rebar and coal futures.

The May 2017 iron ore future rose 1.77% to 690 yuan, mirroring gains of 1.46%, 1.85% and 1.43% in rebar, coking coal and coke futures during the session.

Here’s how the broader commodities complex finished Chinese trade on Friday evening.

SHFE Copper ¥48,420 , 0.10%
SHFE Aluminium ¥14,070 , -0.35%
SHFE Zinc ¥22,680 , -0.68%
SHFE Nickel ¥90,950 , 0.75%
SHFE Rebar ¥3,550 , 1.46%
DCE Iron Ore ¥690.00 , 1.77%
DCE Coking Coal ¥1,318.00 , 1.85%
DCE Coke ¥1,806.50 , 1.43%

Chinese commodity futures will resume trade at midday AEDT, with many eyeing movements in steel, coal and iron ore futures following news over the weekend that China will continue with its pursuit of eliminating excess capacity in the nation’s steel and coal sectors.

According to the China’s National Development and Reform Commission (NDRC), steel capacity will be cut by a further 50 million tonnes, and coal output by more than 150 million tonnes, in 2017, continuing the pledge made at the start of last year to close 100 million-150 million tonnes of steel capacity and 800 million tonnes of outdated coal capacity by 2020.

The cuts, along with supply disruptions and a lift in Chinese steel demand, helped power some enormous price gains in steel product and it’s related inputs over the course of 2016.

If that form is maintained today, it could deliver further support to prices once trade in Chinese futures gets underway.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.