The iron ore rally is looking shaky as futures plunge again

Photo by China Photos/Getty Images

Chinese iron ore futures were smoked in overnight trade, finishing the session nursing heavy losses.

The most actively traded May 2017 contract on the Dalian Commodities Exchange closed at 536.5 yuan, a decline of 2.54%.

There were similarly large declines registered for rebar and coking coal futures, indicating that the drop was likely due to deteriorating sentiment towards steel markets rather than iron ore specifically.

Earlier in the session, the spot price for benchmark 62% fines slumped by 2.4% to $77.60 a tonne, according to the Steel Index, leaving it some 6.4% below the multi-year peak of $82.80 a tonne struck in mid-December.

The group suggested that weakness in futures drove the fall in spot markets.

Trade in Chinese commodity futures will resume at Midday AEDT.

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.