After surging to a fresh three-month high on Monday, it’s been nothing but one-way traffic for iron ore prices of late: lower.
This was especially so on Thursday where prices were hammered.
The spot price for benchmark 62% fines slumped by 3.52% to $59.50 a tonne, according to Metal Bulletin, the largest daily percentage decline seen since June 14.
Year to date gain it is still up 36.6%.
Analysts at Metal Bulletin noted the decline — yet again — coincided with weakness in Chinese steel prices.
“China’s spot rebar prices dropped amid persistently slow sales and continued weakness in the futures market,” they wrote in a note released Thursday evening.
“Downward pressure persisted during the day, with futures prices sliding further, while transactions in the spot market remained sparse amid cautious sentiment and unfavourable weather.”
Doing little to install confidence that extreme speculative forces in iron ore markets have been removed, Chinese iron ore futures exploded higher overnight, not lower, with the most actively traded September 2016 contract on the Dalian Commodities Exchange surging 4%.
It closed at 494 yuan, the highest level seen since early May. There were also similar, albeit smaller, gains in Chinese rebar and coking coal futures.
Trade in Chinese commodity futures will resume at 11am AEST. Hopefully by then an explanation for the enormous rebound in futures will be known.