Iron ore spot markets continued to slide on Monday, undermined by thin trading volumes and another plunge in Chinese futures.
The spot price for 62% fines skidded 1.93% to $US80.60 a tonne, extending its decline over the past two sessions to 3.3%.
The losses for lower grade ores were even more severe with the price for 58% fines slumping 4.1% to $US56.39 a tonne.
Metal Bulletin said that the losses coincided with weakness in rebar prices due to thin trading conditions following the Lunar New Year holiday, along with another slide in Chinese futures.
Others put the decline down to burgeoning inventories of both steel and iron ore.
“Steel inventories rose between the start and end of the Lunar New Year and there are high inventories of iron ore at the ports, so investors are reluctant to keep buying,” a trader in Shanghai told Reuters on condition of anonymity.
Iron ore port inventories have ballooned in recent months, rising to the highest level seen since at least 2004, according to data released by Steelhome.
That corresponded with news that exports of iron ore from Australia’s port Hedland to China grew by 19.3% year-on-year in January, according to figures released by the Pilbara Ports Authority on Monday.
However, after days of enormous losses, the selloff in Chinese commodity futures ebbed in overnight trade, suggesting that the slide in spot markets may also follow suit.
The May 2017 iron ore future closed the overnight session down 0.25% at 604.5 yuan. Rebar futures traded separately on the Shanghai Futures Exchange were basically flat, losing 0.06% to 3095 yuan.
That’s a big divergence to the selloff seen in the days following the Lunar New Year holiday, and hints that the selling pressure in spot markets may be starting to ease.
Trade in Chinese commodity futures will resume from Midday AEDT.