Iron ore tumbles again

Photo by Clive Rose/Getty Images

Iron ore is at a three-week low.

According to Metal Bulletin, the spot price for benchmark 62% fines slid by 1.6% to $75.61 a tonne, adding to the 2% slump seen on Wednesday.

It now sits at the lowest level since August 17, extending the losses from August 21 to 5.4%.

The weakness in the benchmark was replicated across the board.

The price for 58% fines fell 2.3% to $47.03 a tonne while ore with 65% Fe content lost a smaller 0.7%, finishing the session at $98.70 a tonne.

Once again, the losses in spot markets followed another late slide in Chinese rebar and iron ore futures.

Rebar futures in Shanghai fell 2.4% to 3,958 yuan a tonne, outpaced by an even larger slide in iron ore futures in Dalian which finished trade at 545.5 yuan, down 3.8% for the session.

“Chinese steel prices have come under pressure as steel stockpiles lift. China’s steel rebar inventories lifted % last week, the largest gain since February,” said Vivek Dhar, mining and energy commodities analyst at the Commonwealth Bank.

“Iron ore futures also fell on demand concerns as steel mills anticipate sintering cuts in Northern China ahead of the National People’s Congress that begins in Beijing on October 18.”

Others noted that a further round of environmental inspections from China’s Ministry of Environmental Protection, this time targeting factories and construction sites, may have contributed to the slide in futures.

“The inspections affect downstream buyers more than steel mills on the supply-side,” Wang Yilin, analyst at Sinosteel Futures, told Reuters.

However, continuing the choppy movements seen in recent week’s, Chinese futures unwound most of Wednesday’s day session losses in overnight trade.

Here’s the final scoreboard.

SHFE Rebar ¥3,986 , 0.10%
DCE Iron Ore ¥549.00 , -0.18%
DCE Coking Coal ¥1,402.50 , 1.01%
DCE Coke ¥2,388.00 , 1.27%

Both rebar and iron ore futures finished above the day session close, providing an early indicator that the weakness in physical markets may not last.

The performance of futures today will go a long way to answering that question.

They’ll resume trade at 11am AEST, around two hours before the release of Chinese trade figures for August, including iron ore imports and Chinese steel exports.

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