Iron ore prices continued to soar after repeated highs in last Friday’s close, these gains reflected the renewed and sustained strength in Chinese steel prices.
The price for benchmark 62% fines increased to $76.48 a tonne, up 0.6% as reported by metal bulletin. Reaching its highest level since early March this year.
Sustained strength in Chinese steel prices helping iron ore
Gains were recorded in both the higher and lower during the session.
The price of 58% fines soared to $54.31 a tonne up 1.3%, while the price of 65% Brazilian fines climbed a modest 0.4% to $98.40 a tonne.
Since their year-to-date lows, all three iron ore grades have increased more than 20%.
These gains were reflected across the broad with similar moves seen in Chinese Steel futures throughout the session.
Adding to gains earlier in the week, Shanghai rebar (SHFE rebar) futures ended Friday’s session at 4,228 yuan, one of its best levels in two months.
Following a strong 8.2% fall in rebar stocks, data from Mysteel Global last week has revealed steel inventories held by Chinese traders fell to 9.9 million tonnes, down 490,700 tonnes, reflecting this.
Meanwhile steel mill utilisation rates are holding firm according to Business Insider Australia. This comes after and in spite of temporary production cuts after poor weather conditions.
Last week, utilisation rates were down to 68.23%, from 68.37% the week prior.
The surge in Chinese steel futures have aided both iron ore and coking coal contracts to move higher on the Dalian Commodities Exchange (DCE), as reported by Business Insider Australia.
With demand spiking, now is a good time to think about investing. Expert analyst for Markets & Money Jason Stevenson gives his ‘Top 10 Australian mining stocks’ in his free report to get you started.
Weakness in steel prices could spell trouble for iron ore prices
Despite the continued strength seen in iron ore futures — which have repeatedly climbed in over the last week and over the year as a whole — all contracts aside from iron ore contracts ended lower on Friday’s close, with commodities such as SHFE rebar, DCE Coking Coal and DCE coke down 0.73%, 1.76%, and 2.08% respectively.
Iron ore contracts do run the risk of softening come today’s open, so it might be an idea to look to the Chinese economy as weakness in steel prices suggest this might be the case.
For Markets & Money
PS: Aussie investors have seen great results from iron ore investments in the past and with demand set to increase this could still continue. But Markets & Money resources analyst, Jason Stevenson, believes that your best opportunities lie in smaller, more speculative stocks which aren’t restricted to iron ore. The kind that could see massive share price moves from a single positive drill-hole result. For 10 of his favourite mining stocks on the Aussie market this year, download his free report ‘Top 10 Mining Stocks 2018’ today.