- Iron ore spot and futures markets rebounded modestly on Wednesday following several days of heavy losses.
- The gains were led by lower grades which jumped by over 2%.
- Chinese rebar and bulk commodity futures continued to inch high in overnight trade.
After tumbling over 15% since the start of March, iron ore markets finally found some support on Wednesday.
And with Chinese futures up again in overnight trade, it looks like there may be some follow-through buying today.
According to Metal Bulletin, the spot price for benchmark 62% fines rose 0.5% to $67.25 a tonne, snapping a three-day losing streak that saw it shed 7.2% in value.
Gains were also recorded across the board, especially in lower grades.
The price for 58% fines jumped 2.6% to $39.06 a tonne, outpacing a smaller 0.4% increase in ore with 65% Fe content which closed at $83.70 a tonne.
Analysts at Macquarie Bank note the modest revival coincided with the conclusion of China’s National People’s Congress (NPC) a day earlier, something it believes contributed to the selloff in steel and bulk commodity markets in recent weeks.
“This year’s late Chinese New Year holiday, and a prolonged NPC meeting, 2018’s post-winter seasonal restock of commodities has not really occurred,” Macquarie said.
However, after meeting with a wide variety of market participants last week, Macquarie says the prevailing view was that demand from construction and industrial firms had “simply been deferred, not curtailed”.
“Consensus is for a rebound in downstream industrial and construction activity, post-NPC,” it says.
Perhaps as a result of the conclusion of the NPC, Chinese iron ore futures pushed higher during Wednesday’s day session, adding to the gains seen overnight on Tuesday.
The May 2018 contract closed the day at 463 yuan a tonne, mirroring similarly small increases in coke and coking coal futures which finished at 1,957 yuan and $1,291.5 yuan a tonne respectively.
Rebar futures went the other direction, falling modestly to 3,617 yuan a tonne.
Those trends continued in overnight trade with the bulks continuing to outperform rebar during the session, albeit by a small margin.
Here’s the scoreboard.
SHFE Rebar ¥3,624 , -0.60%
DCE Iron Ore ¥468.00 , 1.19%
DCE Coking Coal ¥1,292.00 , -0.62%
DCE Coke ¥1,965.00 , 0.26%
The strength in iron ore futures hints the cautious buying in spot markets on Wednesday may continue today.
All commodity contracts will resume trade at midday AEDT.