Iron ore spot markets were hammered again on Wednesday, dropping to a fresh seven-month low following another ugly decline in Chinese futures.
And with the latter down again in overnight trade, there are few signs of the selling pressure abating, at least not yet.
According to Metal Bulletin, the spot price for benchmark 62% fines slumped by 2.53% to $57.02 a tonne, leaving it at the lowest level since October 13, 2016.
In May alone it lost 17.1%, extending its decline from the multi-year high of $94.86 a tonne struck on February 21 to 39.9%.
The weakness in the benchmark price was mirrored in other ore grades, both higher and lower.
Metal Bulletin said the price for 58% fines fell by a larger 2.64% to $38.70 a tonne.
The sharp drop in spot markets followed an even larger plunge in Chinese futures, with rebar, iron ore and coking coal contracts losing 3.6%, 6% and 9% respectively.
Clearly the decline in all three was linked to the outlook for steel prices, however, despite the shellacking in futures, spot rebar prices actually rose, said Metal Bulletin.
“China’s spot rebar prices moved up on Wednesday following gains in the billet market made during the Dragon Boat Festival break,” the group said.
That suggests that the moves in futures may have been driven by speculative forces, rather than fundamental factors.
Indeed, there was little in the Chinese economic data released yesterday to explain the plunge with activity across the nation’s manufacturing, construction and steel industries all improving in May.
Hardly an outcome that you’d expect would warrant declines of 3% or more.
Regardless of whatever is driving the price action right now, it continued in overnight trade.
Here’s how iron ore, rebar, coking coal and coke futures finished the session.
SHFE Rebar ¥3,105 , -2.39%
DCE Iron Ore ¥424.50 , -3.19%
DCE Coking Coal ¥962.50 , -2.88%
DCE Coke ¥1,441.00 , -3.03%
Pretty ugly, although despite the large percentage declines reported, most contracts closed around the same levels or higher from those seen at the finish of Wednesday’s day session.
Trade in futures will resume at 11am AEST.