Iron ore prices continue to grind higher, recovering after a sharp tumble in late November.
According to Metal Bulletin, the spot price for benchmark 62% fines rose by 0.3% to $67.38 a tonne, logging the sixth gain the past seven trading sessions.
Modest gains were also seen across lower and higher grades on Wednesday.
The price of 58% fines continued its recent out-performance, lifting 0.6% to $43.35 a tonne, narrowing the discount to the benchmark to 35.7%.
The price of 65% Brazilian fines also caught a bid, rising 0.5% to $83.40 a tonne.
After suffering the largest one-day percentage fall in years at the start of last week (or, in the case of lower and higher grades, the most on record since spot pricing began), the price for 58% fines, 62% fines and 65% fines has now rallied 9.1%, 4.9% and 3% respectively.
“We think most of the correction is behind us and we maintain our view of a $60-70 a tonne range-bound market,” said commodity analysts at Goldman Sachs in relation to the benchmark price.
“We forecast $70 a tonne over the three-month horizon as restocking needs after the winter cuts and seasonally weak supply support iron ore prices in the first quarter of 2019 before eventually falling.
“Our three, six and 12-month forecasts are $70, $60, and $60 a tonne.”
Like spot markets, near-dated Chinese steel and bulk commodity futures continued to push higher on Wednesday with the January 2019 rebar, hot-rolled coil, iron ore, coking coal and coke futures all finishing higher than Tuesday’s night session close.
The gains in steel contracts, in particular, were significant, boosted by speculation of deeper production cuts in Hebei, China’s top steelmaking province.
According to sources who spoke to Reuters, government officials from Tangshan, China’s largest steel production hub, held a meeting with representatives from industrial plants in the region on improving the general environmental situation.
Despite the threat of lower steel production crimping demand for raw materials, that didn’t deter buying in iron ore, coking coal and coke contracts, suggesting broader price movements continue to be driven by expectations for Chinese steel mill profit margins.
Wednesday’s day session gains were consolidated upon in overnight trade, suggesting that spot markets may remain supported in early deals on Thursday.
Here’s the closing scoreboard from Wednesday’s night session.
SHFE Hot Rolled Coil ¥3,663 , 0.58%
SHFE Rebar ¥3,761 , -0.11%
DCE Iron Ore ¥507.00 , 0.90%
DCE Coking Coal ¥1,411.50 , 0.50%
DCE Coke ¥2,330.50 , 0.60%
Trade in Chinese commodity futures will resume at midday AEDT.
Source: Business InsiderPrevious Next
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