Mirroring the move seen in Chinese futures, the spot iron ore price ripped higher on Friday, closing at the highest level seen since October 16 last year.
Metal Bulletin’s iron ore index (MBIOI-62) rose by 5%, or $2.55, to $53.75 a tone, leaving its year to date gain at 23.4%.
From $38.30, the record low level struck on December 11 last year, the price has now rallied by 40.3%.
It’s enormous, as demonstrated by the chart below.
Suggesting that the rally may continue today, Chinese iron ore and rebar futures surged on Friday evening.
The most actively traded May 2016 contract on the Dalian Commodities Exchange last traded at 407 yuan, representing an increase of 4.9% on the prior day’s settlement level of 388 yuan.
That gain was replicated in rebar futures with the May 2016 contract on the Shanghai Futures Exchange rallying by 4.96% to 38,690 yuan.
Markets will be watching the reopening of futures trade at 12pm AEDT to see what impact, if any, China’s lowered GDP growth forecast for 2016 – announced over the weekend – will have on steel and iron ore demand.