- Iron ore markets logged their largest gain in months on Wednesday.
- The reversal, snapping the longest losing streak since 2015, was driven by the release of stronger-than-expected Chinese economic data.
- Chinese futures fell modestly in overnight trade.
Iron ore markets ripped higher on Wednesday, boosted by a swathe of stronger-than-expected Chinese economic data.
According to Metal Bulletin, the spot price for benchmark 62% fines jumped 2.7% to $71.64 a tonne, snapping an eight session losing streak in the process.
It was the largest daily percentage gain since January 2.
Both higher and lower grades jumped also jumped during the session, albeit by a smaller margin compared to the benchmark.
Ore with 65% Fe content rose 2.1% to $88.20 a tonne, outpacing a smaller 1.5% increase for 58% fines which settled at $41.06 a tonne.
The reversal in spot markets coincided with the release of stronger-than-expected Chinese industrial output and fixed asset investment figures for early 2018.
Industrial output grew by 7.2% between January and February compared to a year earlier, breezing past economists forecasts for a smaller increase of 6.1%.
Crude steel output rose 5.9% from a year earlier, helping to dispel growing concerns about the outlook for iron ore demand from mills.
Steel prices also received a boost from a surprise acceleration in fixed asset investment, increasing 7.9% from a year earlier, above the 7% level expected.
“Signs of a pickup in investment in the housing sector buoyed sentiment in the steel and iron ore markets,” said Jack Chambers, Economist at ANZ bank.
“Property investment rose 9.9% between January and February, much higher than the growth achieved this time last year.”
Along with firmer economic data, Chambers said steel and iron ore futures were also buoyed by reports of further steel production curbs in the industrial city of Tangshan in China’s Hebei Province.
“Tangshan has ordered mills closest to the city centre to halt 15% of capacity, while the remainder will have to idle around 10%.”
Iron ore futures in Dalian added 2.1%, closing trade at 490 yuan a tonne. Coking coal and coke futures also rallied, jumping 2.7% and 1.1% respectively to 1,294.5 yuan and 2,021 yuan a tonne.
Rebar futures in Shanghai, in comparison, lagged the broader move, closing up 0.6% at 3,735 yuan a tonne.
As seen in the scoreboard below, those trends were reversed in overnight trade.
SHFE Rebar ¥3,751 , 1.19%
DCE Iron Ore ¥487.50 , 0.52%
DCE Coking Coal ¥1,285.50 , 1.66%
DCE Coke ¥1,994.50 , 0.10%
Rebar futures continued to push higher while iron ore, coking coal and coke contracts gave back some of the gains achieved earlier in the day.
Trade in Chinese futures markets will resume at midday AEDT.