Seaborne iron ore prices took a breather on Monday amid quiet trading and holidays. Prices are still hovering around $100/tonne, but with the trade war leaving China’s currency under pressure there are negative as well as positive factors acting on iron ore prices.

The Kallanish KORE 62% Fe index pulled back $0.17/t to $99.23/dry metric tonne cfr Qingdao. On the Dalian Commodity Exchange September iron ore settled up CNY 12/t at CNY 707.5/t ($102.37/t) as the market continued to be driven by the surge on Friday. On the Singapore Exchange, June 62% Fe futures settled up $0.66/t at $98.42/t. In Tangshan, billet prices were flat on Monday at CNY 3,560/t, after losing CNY 10/t on Saturday and regaining CNY 10/t on Sunday.

Singapore was technically on holiday on Monday, although futures still traded on SGX. The absence of several traders from the market deepened the inactivity. Mills are already taking time to consider their buying strategies in the new higher price environment.

The China Iron and Steel Association (CISA) says that it expects steel prices to remain rangebound in the coming month. It argues that prices cannot increase because of high production levels and concerns over demand and the trade war. But they also cannot fall because inventories continue to decline, not to mention elevated iron ore prices.

That does not mean nothing is changing, however. Since 5 May the Yuan has depreciated almost 2.7% to around CNY 6.918/USD and some analysts point to far steeper declines to come. In CNY terms that makes iron ore even more expensive, and in international terms it makes Chinese steel prices more competitive. In the middle are mill margins, which are being steadily squeezed. Something will have to give.