The iron ore price rose modestly overnight, although the gain may be more than reversed this evening.
According to Metal Bulletin, the spot price for benchmark 62% fines rose 26 cents, or 0.46%, to $56.92 a tonne on Tuesday.
Here’s an explanation from Metal Bulletin as to why the spot price may have risen on Tuesday in the face of a sharp sell off in Chinese stocks.
“Chinas National Bureau of Statistics announced today that China’s domestic iron ore output continued to trend downwards in July, with volumes falling 7.5% year-on-year on softer demand. The country’s run-of-mine (ROM) output totalled 126.19 million tonnes last month, which is also close to 2% lower month-on-month. Volumes for the first seven months of 2015 are also down by 10.1% from year-earlier levels, at 760.99 million tonnes”.
Despite the small rise in spot, iron ore futures were hammered overnight in China.
The most actively traded January 2016 contract on the Dalian commodities exchange fell by 9.5 yuan, or 2.48%, to 374 yuan – a fresh one-week low.
Should that loss continue through today’s day session, it suggests a substantial decline in the spot price will likely arrive this evening.
Trade in Dalian will resume at 11am AEST.