Money Iron ore catches a bid as steel prices surge again

07:05  13 july  2018
07:05  13 july  2018 Source:   businessinsider.com.au

Iron ore markets edge lower

  Iron ore markets edge lower Iron ore spot markets closed mixed on Wednesday with higher grades rising while mid and lower grades fell.  Iron ore spot markets remain quiet, continuing to ignore the wild swings seen in Chinese stocks and yuan.

The strength in iron ore mirrors another jaw-dropping surge in rebar futures traded separately on the Shanghai Futures Exchange. Strength in Chinese steel prices , driven by low inventory levels and strong demand, has seen Chinese steel mill margins balloon in recent months, encouraging firms to

Iron ore continues to march higher, hitting the highest level in four months on Thursday on the back of another surge in steel prices . However, not everyone believes that fundamentals have been driving steel prices higher recently.

a person standing in front of a sunset© Provided by Getty

    Iron ore spot markets rose on Thursday, supported by continued strength in steel prices and an improvement in investor risk appetite.

    According to Metal Bulletin, the price for benchmark 62% fines jumped 1.1% to $64.06 a tonne, the largest increase since June 26.

    It now sits at one-week high.

    a close up of a map© Provided by BI

    Like the benchmark, both higher and lower grades recorded strong gains for the session.

    The price of 65% fines added 0.9% to $37.58 a tonne, outpacing a 0.8% increase for 65% fines which settled at $91.50 a tonne.

    The across-the-broad gains was undoubtedly helped by another surge in Chinese steel prices.

    Iron ore markets are ignoring the wild swings in Chinese financial markets

      Iron ore markets are ignoring the wild swings in Chinese financial markets Iron ore markets are quiet as both spot and futures prices moved very little on Tuesday and in overnight trade. Iron ore was immune to the volatility seen in other Chinese financial markets on Tuesday.Chinese futures were quiet, as were spot markets.According to Metal Bulletin, the spot price for benchmark 62% fines rose by a solitary cent to $64.55 a tonne, a move that is generally only reserved for days when Chinese holidays are held.© Provided by Business Insider Inc The movements elsewhere were also incredibly muted. The price of 58% fines added three cents to $37.45 a tonne while 65% fines lost 0.

    The spot iron ore price rose for a fourth consecutive session on Monday, buoyed by renewed strength in steel prices . According to Metal Bulletin, the gains in iron ore corresponded with another surge in Chinese steel prices .

    The surge in iron ore futures coincided with even larger gains in Chinese rebar futures on the " Prices continue to be driven by demand factors in China, but a falling US dollar has also "As long as steel margins remain elevated, the incentive for steel mills is to purchase iron ore to boost steel

    Rebar futures in Shanghai surged to as high as 3,990 yuan -- the highest level since September 2017 -- before finishing the session at 3,976 yuan.

    That was higher than Wednesday's night session close of 3,944 yuan.

    Analysts put the continued strength in steel prices down to an ongoing push from regulators to improve air quality in northern Chinese provinces.

    According to Reuters, China’s cabinet has launched a new cross-ministerial leadership group that will draw up plans to tackle air pollution in northern regions.

    “The high-class leadership group will certainly be a strong deterrent to environmental violations and may also restrain output at mills and mines,” Zhuo Guiqiu, an analyst at Jinrui Futures, told Reuters.

    Iron ore tumbles as tariff deadline looms

      Iron ore tumbles as tariff deadline looms The benchmark iron ore spot price tumbled to the lowest level since June 28 on Thursday. According to Metal Bulletin, the spot price for benchmark 62% fines tumbled 1.7% to $63.14 a tonne, coming within a whisker of hitting a seven-month low.

    BI General Contributors. Iron ore futures are surging again . " Iron ore prices are rising on demand hopes as higher steel prices encourage Chinese steel mills to boost production," he says, noting that end-user demand "remains resilient".

    Continuing a familiar pattern, Metal Bulletin said that strength in iron ore coincided with further price gains in Chinese steel markets. "China's spot rebar market surged on Monday after a major producer announced higher ex-works prices ," it said.

    Along with temporary output curbs in the major steel hub of Tangshan, this may have contributed to continued buying in steel futures.

    A continued draw in Chinese steel inventories may also be feeding into the bullish price momentum.

    "The levels of absolute distributor inventories are at one of the lowest in the last decade for this time of the year," said analysts at Citibank's metals and mining equities team.

    a close up of a map© Provided by Supplied

    "Only in 2016 and 2017 have inventories been lower at this time of the year and both were years which saw significant increases in steel prices and steel spreads over the remaining six months of the year."

    With steel prices being supported by supply and demand factors, as well as a general lift in investor sentiment on Thursday, it helped to underpin bulk commodity futures during the session.

    Dalian iron ore finished trade at 466 yuan, climbing from Wednesday's night session close of 463 yuan.

    In comparison, coking coal and coke contracts eased marginally, finishing at 1,153.5 and 2,069.5 yuan respectively.

    As seen in the chart below, there was very little movement on those closing levels during Thursday's night session.

    SHFE Rebar ¥3,987 , 1.27%

    DCE Iron Ore ¥466.50 , 0.43%

    DCE Coking Coal ¥1,152.50 , -0.26%

    DCE Coke ¥2,061.50 , 0.15%

    Chinese commodity futures reopen at 11am AEST, around two hours before the release of Chinese international trade data for June, including iron ore imports and steel exports figures.

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