Iron ore spot markets fell modestly on Wednesday having hit a fresh multi-year high a session earlier, weighed down by a rare bout of weakness in Chinese futures.
The spot price for benchmark 62% fines slipped 0.59% to $94.30 a tonne, according to Metal Bulletin, marking the first decline seen in five trading sessions. It has rallied 19.6% year to date.
Lower grade ores underperformed during the session with the price for 58% tumbling 2.4% to $64.79 a tonne.
Metal Bulletin said the weakness was driven by a pullback in steel prices after a rapid rally in recent days.
“China’s spot rebar prices retreated on Wednesday February 22 after consecutive days of increases since last Friday,” the group said. “Buyers’ reluctance to procure materials led to prices falling after several days of increases, according to market participants.”
“Furthermore, a softening of the futures market put additional pressure on spot rebar prices,” it added.
That turnaround just happened to correspond with cautious remarks on the outlook for Chinese steel demand from several leading officials.
“The future is kind of pessimistic,” Frank Zhong, chief representative of the World Steel Association, said at Metal Bulletin’s China Iron Ore Conference held in the Chinese city of Dalian. “The story is not all bright and shiny.”
According to the AFR, Zhong said that Chinese steel consumption would fall below 600 million tonnes by 2020, 20% lower than its 2013 peak.
The downbeat assessment offered by Zhong was mirrored by Lv Zhenhua, the government’s chief forecaster from the China Metallurgical Industry Planning and Research Institute.
“We see an average price of $65 a tonne for this year,” he said at a speech delivered at the conference.
Lv said that prices would move to as low as $55 a tonne at points during the year, more than 40% below current levels.
In overnight trade, Chinese commodity futures were slightly lower, although many contracts finished trade well of their session lows.
Here’s the overnight scoreboard:
SHFE Copper ¥49,110 , 0.08%
SHFE Aluminium ¥14,165 , -0.18%
SHFE Zinc ¥23,415 , 0.54%
SHFE Nickel ¥89,850 , -0.51%
SHFE Rebar ¥3,523 , -0.65%
DCE Iron Ore ¥723.00 , -0.07%
DCE Coking Coal ¥1,233.00 , -0.88%
DCE Coke ¥1,682.00 , -0.97%
Trade in Chinese commodity futures will resume at midday AEDT.
You can read more here.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.