Chinese commodity futures just got crushed

Chinese bulk commodity futures endured another bloodbath on Monday, recording falls of 5% or more.

The most actively traded September 2016 iron ore future on the Dalian Commodities Exchange finished the session at 353 yuan, representing a decline of 4.97%.

Earlier in the day it traded down to 350 yuan, or 6%, its maximum allowable daily decline based on existing exchange rules.

The sell-off corresponded with news that Chinese iron ore port inventories swelled to over 100 million tonnes last week, the highest level seen since March 2015.

According to Bloomberg, citing data from the Shanghai Steelhome Information Technology Company, inventories swelled 1.6% to 100.45 million tonnes, leaving them up 7.9% from levels seen at the start of 2016.

That, along with signs that Chinese steel production may be slowing after hitting a record-high in March, may have contributed to Monday’s weakness.

Hinting that the decline was related to the steel market rather than iron ore specifically, rebar and coking coal futures were also hammered, falling 5.21% and 5.37% respectively.

Like iron ore, they too traded limit down earlier in the session.

Mirroring the movement in Chinese futures, the spot iron ore price tumbled on Monday, recording one of its largest one-day losses on record.

According to Metal Bulletin, the spot price for benchmark 62% fines fell by $3.67, or 6.69%, to $51.22 a tonne, extending its losses from April 21 to 27.3%.

It was the third largest percentage decline registered in the past two years, and left the price at levels last seen on March 3.

Despite the recent sell-off, the price has still risen 17.6% over the course of 2016.

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