After reversing sharply overnight, there’s been no abatement of the selling pressure in Chinese iron ore futures on Wednesday.
Here’s the latest scoreboard with a little over 90 minutes to trade.
SHFE Rebar ¥3,744 , -4.85%
DCE Iron Ore ¥574.50 , -4.49%
DCE Coking Coal ¥1,439.00 , -2.28%
DCE Coke ¥2,307.50 , -1.09%
Both iron ore futures in Dalian and rebar futures are off by close to 5%, adding slightly to the losses seen overnight.
The sudden bout of selling follows a strong rally in both contracts over the last two months, fueled by optimism that burgeoning margins will prompt steel mills to lift output levels, underpinning demand for iron ore and coking coal.
However, that optimism has been dented by another warning from the China Iron and Steel Association (CISA) to speculators betting on further price gains.
“Environmental restrictions during the winter heating period will have a certain impact… (but) there will not be any big production shortage and steel product prices are unlikely to see a rapid increase,” CISA said in a statement released on its website late on Tuesday.
It added that “in the near future, prices are unlikely to continue to rise by a large margin and are likely to continue fluctuating”.
That warning, coming at a time of stretched one-way positioning as a result of the enormous rally over the preceding two months, has seemingly sent some traders scurrying for the exits today.