It looks like the iron ore price pullback is over

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Iron ore spot markets continued to slide on Friday, notching up a third consecutive decline in the process.

But with Chinese iron ore futures soaring on Friday evening, it points to the likelihood of a rebound in spot markets today.

According to Metal Bulletin, the spot price for benchmark 62% fines fell 0.92% to $90.50 a tonne, extending the decline from the multi-year high of $94.86 a tonne stuck on Tuesday to 4.6%.

Prices for higher grade ores also fell, although lower grades saw a small gain for the session.

Analysts at Metal Bulletin put the ongong weakness down to high steel inventories, leading to a deterioration in sentiment and prices.

“China’s spot rebar prices moved down for a third continuous day as traders continue their efforts to offload materials from their inventory,” the group said on Friday.

“Spot market inventories have risen to high levels in recent weeks. Amid the continual decline in the paper market [futures], traders with a lot of stock are trying to offload their materials by cutting prices.”

However those concerns were no where to be seen in Friday evening with Chinese commodity futures — including rebar — ripping higher after several days of losses.

The scoreboard below tells the story:

SHFE Copper ¥48,210 , 0.54%
SHFE Aluminium ¥13,920 , 0.61%
SHFE Zinc ¥23,075 , 1.14%
SHFE Nickel ¥90,350 , 2.18%
SHFE Rebar ¥3,537 , 2.55%
DCE Iron Ore ¥712.50 , 2.96%
DCE Coking Coal ¥1,281.00 , 4.44%
DCE Coke ¥1,723.50 , 3.02%

There was no immediate catalyst to explain the enormous rebound, other than a period of relative stability during Friday’s day session may have prompted traders to buy after several days of significant losses.

Momentum swings have been amplified in these markets over the past year due to a sharp increase in speculative trading activity.

Trade in Chinese commodity futures will resume at midday AEDT.

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