Iron ore market finally gets a reality check — but China needs to get even more real
Launceston, Australia — It’s taken a while but the iron ore market is finally getting the reality check it needed, although the Chinese part of the market still looks like it requires a bigger dose. Spot iron ore fell to $84.99 a tonne on Wednesday, down 10.4% since its peak this year of $94.86, reached on February 21, although it is still up 7.7% so far this year. The most actively traded iron ore futures contract on the Dalian Commodity Exchange (DCE) fell to 677.5 yuan ($98.37) a tonne on Wednesday, a drop of 6.9% since its peak so far this year of 727.5 yuan on February 21. However, the DCE contract is still up 22.2% so far this year, indicating that while it has started to correct, the process likely still has some way to go. This can be seen by looking at the gap between the spot price for cargoes delivered to China and the DCE price, the latter of which is driven by small investors and day traders, who often respond differently than the end-user buyers and sellers that partic...
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