Iron ore suffers weakness on Friday, trend likely to continue Monday
Iron ore spot markets sustained another downslide on Friday. With this, they have now slumped for the fifth time in six sessions.
As noted by Metal Bulletin, the spot price for benchmark 62 percent declined by 0.08 percent to reach US$86.72 (AU$114.91) a tonne – which comes as a fall of 8.6 percent from the high of US$94.86 (AU$125.69) a tonne reached on Feb. 21. The advance in 2017, as a result, was condensed to 10 percent.
The prices of lower grade ores declined during the session. On the other hand, prices for higher grades enjoyed a rise; attributed largely to the strengthening of Chinese coal futures.
“China’s spot rebar prices rebounded on Friday, March 10, after four days of drops amid some gains in the futures and billet markets,” the group wrote on Friday,” according to Metal Bulletin. “The gains in the futures and billet markets gave support to rebar prices, sending them on a slight rebound. But after the price rise, trading activity in the market dropped as most buyers are not expecting a continual rise.”
Contrary to market participants, who were disinclined to transact at high levels, future markets kept up on Friday. The frailty in spot and physical markets is expected to persist on Monday.
Meanwhile, the most active rebar on the Shanghai Futures Exchange finished at 3389 yuan (AU$649.92) a tonne, on the heels of a one-month low of 3348 yuan (AU$642.05) a tonne. On Feb. 27, the construction steel product reached its highest in three months, at 3648 yuan (AU$699.59) a tonne.
Iron ore prices on the Dalian Commodity Exchange fell by 1.1 percent to close at 658 yuan (AU$126.19) per tonne. This came following a one-month low of 643 yuan (AU$123.31) a tonne recorded earlier in the session. On Feb. 21, the price of the steel making raw material reached 641.50 yuan (AU$123.02) a tonne. It was the strongest recorded number since the exchange launched the contract in October 2013.
According to the Shanghai trader, the Chinese steel demand is expected to rise along with construction activity as mercury levels start increasing. The fall in rebar futures "weighed on buying interest in the spot market, leaving sellers with little choice but to cut prices," the Metal Bulletin stated. "A number of mills and traders who have built up large inventories are not expected to make big concessions, however, as they are expecting a supply shortage amid a government clampdown on the production of substandard steel."
