Seaborne iron ore prices and Chinese steel futures prices ended their latest decline on Wednesday. Steel futures were close to historic lows while iron ore was holding a little higher in the mid-$50s.

The Kallanish index for 62% Fe Australian fines upticked by $0.83 to $52.91/dry metric ton cfr Qingdao. There were no deals recorded on globalORE but futures prices in Singapore settled a little higher.

The January 2016 rebar contract on the Shanghai Futures Exchange closed up CNY 11/t over the day at CNY 1,934/t ($304/t), while the same contract for hot rolled coil closed up CNY 8/t at CNY 1,941/t.

Futures prices are continuing to be moved by sentiment, as seen by the link between China’s stock markets and steel and iron ore futures. Although the two have no meaningful direct link, both are being driven by China macro sentiment. The Shanghai Composite Index dropped sharply from 3,200 on Friday to 3,005 on Tuesday but then jumped 4.89% to 3,152 on Wednesday.

Fundamentals continue to be framed by weak Chinese steel demand and growing iron ore supply. The direction of inventories is likely to determine the relative strength in prices and iron ore port stocks rebounded slightly last week. Steel market inventories fell last week but their steady decline over July and August was interrupted in early September, suggesting output is beginning to overwhelm real end user demand.