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  • Iron ore spot markets rose for a second session on Monday, helped by further gains in 
  • Chinese steel prices.
  • The price for 58% fines rose to the highest level since September 2017. The price discount 
  • to the benchmark and 65% fines also narrowed to multi-year lows.
  • The gains came despite the release of very weak Chinese trade data for December.
  • On Monday, Chinese Premier Li Keqiang hinted that policymakers may roll out further 
  • stimulus measures to boost economic activity in the months ahead.

Iron ore spot markets rose for a second session on Monday, helped by further gains in Chinese

 steel prices.

According to Metal Bulletin, the price for benchmark 62% fines rose 0.5% to $73.80 a tonne, 

 pushing back towards the multi-week high of $74.46 a tonne struck on January 8.

Continuing the theme seen in prior sessions, lower grade ore outperformed with the price 

 for 58% fines jumping 1.2% to $48.33 a tonne, leaving it at the highest level since 

 September 5, 2017. That saw the discount to the benchmark price fall to the smallest 

 level since August 2017.

The price for 65% Brazilian fines held steady at $88.20 a tonne for a third consecutive session. 

 With prices for lower grade ore scaling fresh cyclical highs. That saw the price premium 

 demanded for 65% fines narrow to fresh multi-year lows.

“China’s preference for higher grade iron ore has declined notably from recent peaks as mills 

 look to cheaper lower grade alternatives like the 58% Fe grade following the fall in steel 

 margins,” said Vivek Dhar, Minign and Energy Commodities Analyst at the Commonwealth Bank.

“The fall in high grade iron ore prices doesn’t mean that China’s preference for high grade ore is 

 set to diminish structurally, but the economics of higher grade ore over mid and low grade ore 

 remains an important consideration. 

“Steel margins remain the critical driver of iron ore prices and China’s preference for higher 

 grade ore. With steel margins still subdued, we see downside risks to iron ore prices.”

The gains in spot markets followed another strong day for Chinese steel futures as traders largely

 ignored the release of weak Chinese trade data for December. 

The most actively traded rebar and hot-rolled coil contracts finished at 3,575 and 3,459 yuan 

 respectively, above Friday’s night session close of 3,530 and 3,425 yuan.

Those moves helped to drag bulk commodity contracts higher in Dalian with iron ore, coking 

 coal and coke futures closing at 513, 1,245 and 2,015 yuan respectively, all well above where 

 they finished on Friday night.  There was little reaction to data showing Chinese iron ore imports

 fell by 1% in 2018 to 1.064 billion tonnes.

After rising solidly during the day session, profit-taking was evident in overnight trade on 

 Monday with all five contracts finishing lower.

SHFE Hot Rolled Coil ¥3,437 , -0.17%
SHFE Rebar ¥3,553 , 0.00%
DCE Iron Ore ¥510.00 , 0.29%
DCE Coking Coal ¥1,241.50 , -0.08%
DCE Coke ¥2,010.00 , 0.78%

The modest reversal came despite reports from Chinese state media, citing remarks from Premier Li 

 Keqiang, that policymakers may look to roll out further stimulus measures in the months ahead.

 “We should strive for a good start in the first quarter to create conditions for completing 

 the key full-year development targets and tasks,” Li reportedly said.

“Our country’s development environment is becoming more complex this year, there are more 

 difficulties and challenges and the downward pressure on the economy is increasing.” 

Trade in Chinese futures will resume at midday AEDT.

BEIJING - China's steel and iron ore futures started the week firmly on Monday, buoyed by central bank policy easing and on hopes that Beijing and Washington can strike a comprehensive trade deal.

China's central bank on Friday cut the amount of cash that banks have to hold as reserves for the fifth time in a year, freeing up $116 billion for new lending.

A group of U.S. delegates are meeting with their counterparts in Beijing this week for the first face-to-face talks since leaders of the two countries agreed to a 90-day truce in a trade war in December.

"The market is improving its expectations over the macro-economic situation amid Beijing's attempts to stabilise the economy," analysts from Huatai Futures said in a note.

Meanwhile, Baoshan Iron & Steel Co <600019.SS>, the largest listed steel firm in China, said it would raise prices of some steel products for March delivery by 50 yuan ($7.30) a tonne. 

Benchmark construction steel rebar prices on the Shanghai Futures Exchange <SRBcv1> settled 1.8 percent higher at 3,520 yuan a tonne. They jumped as high as 3,526 yuan before the market closed at 0700 GMT, a level last seen on Dec. 21, 2018. 

However, analysts also warned of waning demand in the off-peak season.

Inventories of steel products at Chinese traders rose for the second week in the week ended Jan. 4, adding 416,000 tonnes from the prior week to 8.38 million tonnes, data compiled by Mysteel consultancy showed. Rebar stocks were up 6.4 percent at 3.35 million tonnes and hot-rolled coil stocks were up 2.5 percent at 1.8 million tonnes.

Construction sites in northern China typically halt work in winter due to freezing conditions.

Investors are closely watching the Sino-U.S. trade talks, as well as waiting for further potential stimulus measures from Beijing that could ease downward pressure on China's economy, the analysts said.

The most-active iron ore contract on the Dalian Commodity Exchange <DCIOcv1> closed 1.8 percent higher at 514.5 yuan a tonne, just shy of its day's peak of 515 yuan, its strongest since Oct. 29.

Coking coal futures <DJMcv1> climbed 1.5 percent to 1,195 yuan, while coke for May delivery <DCJcv1> rose 1.5 percent to 1,964 yuan.

($1 = 6.8455 Chinese yuan) REUTERS

DEC. 18, 2018

IRON ORE DAILY: Seaborne prices dip on expectations of stricter winter steel production cuts 

Seaborne iron ore prices fell below $70 per tonne cfr China on Tuesday December 18 amid expectations of more stringent implementation of steelmaking restrictions in China.

MB 62% Fe Iron Ore Index: $69.03 per tonne cfr Qingdao, down $1.44 per tonne. MB 62% Fe Pilbara Blend Fines Index: $68.83 per tonne cfr Qingdao, down $1.44 per tonne. MB 62% Fe Iron Ore Index-Low Alumina: $71.58 per tonne cfr Qingdao, down $0.46 per tonne. MB 58% Fe Premium Index: $61.87 per tonne cfr Qingdao, down $1.80 per tonne. MB 65% Fe Iron Ore Index: $85.30 per tonne cfr Qingdao, unchanged. MB 62% Fe China Port Price Index: 545 yuan per wet metric tonne (implied 62% Fe China Port Price $69.79 per dry tonne), down 2 yuan per wmt. Key drivers Steelmaking production restrictions set for the winter heating season in north China, which had not been very strictly implemented in the past month, could be ramping up in severity according to reports from market...