On Friday iron ore prices continued to rise, most likely due to renewed strength in Chinese steel futures.
Moderate gains were reported in both lower and higher grades, with the level benchmark reaching the highest level since mid-March.
Chinese steel futures aiding iron ore price
There’s a combination of things influencing the prices of iron ore lately, so whether or not these prices are set to stay is undetermined.
But since returning from The Golden Week holidays on 8 October, Chinese financial markets rallied, bouncing back to see the benchmark finish higher over the past five trading sessions.
But the overall gains seen across the board were helped by a sustained rally in Chinese steel markets. This rebound came after temporary production cuts in china’s largest steel mill city, Tangshan, starting from 11–18 October. The scheduled cuts were in effect due to poor weather conditions
58% fines gained 0.4% to $41.43 a tonne, meanwhile 65% Brazilian fines only grew slightly, by 0.1% at $97.20 a tonne.
January 2019 rebar contracts closed 0.7% higher from Thursday’s session, at 4,049 yuan. Shanghai January 2019 contracts also crept higher to 3,888 yuan in the same period, up 0.1%.
A draw in Chinese steel inventories also aided steel futures according to Mysteel Consultancy, as steel product inventory held by Chinese traders reached 10.65 million tonnes falling by 193,400 last week. This could be put down to rebar stocks declining 3.4%, to 4.4 million tonnes.
Reflecting weaker demand due to earlier production cuts, iron ore contracts ended trading at 511 yuan, which was down from last Thursdays close of 514 yuan.
It was the same deal for coke and coking coal futures, finishing lower at 2,463 yuan and 1361 yuan respectively.
Iron ore price forecasts
What we have to remember is that iron ore is a commodity. That means it runs off supply and demand. Data published by the Chinese government on Friday showed iron ore imports grew to 93.47 million tonnes in September, climbing from August’s 89.35 million tonnes.
Taking into account the mixed news for iron ore prices, steel and bulk commodity futures continued to grow on Friday, which meant today’s prices had a bit more of a foothold and would likely react well.
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