Losses were recorded in both lower and higher grades of iron ore on Friday, totalling three consecutive days of declines for the first time since late April.
The price of benchmark 62% fines slipped to 73.87 a tonne — down 1.7% and at its lowest since 22 October.
After hitting a multi-month high of $76.71 on Tuesday, iron ore prices have taken a 3.6% hit. Investors have seen great results from iron ore investment in the past, but with the demand spike plateauing, our resource expert Jason Stevenson believes your best bet lies in smaller speculative stocks which aren’t restricted to iron ore. Read more about in his report here for free.
Chinese furnace capacity to blame for falling iron ore prices
The falls seen across the board correlate with data confirming that Chinese steel mills had hit furnace capacity, falling sharply last week by 0.69% as reported by Mysteel Consultancy.
With 58% fines falling 1.3% to 44.93 a tonne, these were more than the declines seen in 65% Brazilian fines, which closed at $96.50 a tonne, down 0.4%.
Last week, steel product inventories held by Chinese traders fell by 419,800 tonnes to 9.38 million tonnes, according to Mysteel. Rebar inventories also flattened, falling 5.8% in the same trading period.
Things also carried over to January 2019 iron ore contracts, which slipped 3.5%, after already falling from 520.5 yuan to 508.5 yuan on Thursday. With the biggest dip taking prices as low as 501.5 yuan, which was the biggest percentage intraday drop since 19 June.
Coking coal and coke futures traded irregularly at best, most contracts closing flat to moderately higher in Friday night’s session. Here, Coking coal traded lower while coke rallied strongly in the final sections of the session.
Mixed market performances create concern for iron ore prices
The reverse in iron ore prices, most likely has something to do with renewed strength in buying Chinese stocks and yuan later in last week.
Keep in mind that stock indices in China have been among the worst performing recently. And china’s economy future is uncertain, and could be settling into an economic slowdown.
So, we have seen an upwind of currency combined with trade war related positioning from investors.
The performance offers little hints as to which direction iron ore should take.
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.