The benchmark iron ore spot price rose for a fifth consecutive session on Tuesday, but with Chinese futures down heavily overnight it looks like the winning streak may be coming to an end.
According to Metal Bulletin, the benchmark price rose by a further 0.27% to $56.45 a tonne, extending its gain from the one-year low of $53.36 a tonne struck on June 13 to 5.8%.
It now sits at the highest level since June 2, with the current winning streak equalling the longest stretch of gains since late 2015.
While the benchmark price continued to push higher, it was the exception to the rule with prices for both higher and lower grade ores sliding during the session.
The price for 58% fines slid 0.57% to $38.69 a tonne, while that for Brazilian ore with 65% Fe content fell by a smaller 0.42% to $71.90 a tonne.
That weakness coincided with renewed pessimism across Chinese steel markets, making the small gain in the benchmark iron ore price all the more unusual.
“China’s spot rebar prices dropped on Tuesday amid thin trading due to bearish sentiment intensifying,” said Metal Bulletin. “A retreat in the futures market also led to bearish sentiment growing in the market.”
And that bearish sentiment intensified further overnight with rebar and iron ore futures falling heavily, hinting that the winning streak for the benchmark iron ore price may be coming to an end.
Rebar futures fell by 2.47% to 3,042 yuan per tonne, while iron ore slid 1.97% to 423.5 yuan. Both contracts are now well off the highs seen earlier this week.
Coking coal and coke futures also softened, reflective of the gloomy mood.
Perhaps contributing to the pessimism about potential oversupply, Chinese crude steel output remained at elevated levels in May.
According to the World Steel Association, output stood at 72.3 million tonnes, down from the record 72.8 million tonnes produced in April. Despite the small decline, May’s production levels were still up 1.8% on the levels of a year earlier.
China is the world largest steel producer with output of 808.4 million tonnes last year, nearly eight times more than second-placed Japan at 104.8 million tonnes.