Chinese commodity futures are still going nuts, led yet again by iron ore

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Chinese commodity futures are continuing to soar on Monday, following the near-unbelievable gains recorded on Friday.

It’s incredible, as shown the half time scoreboard from Monday’s trading session.

And, yet again, iron ore is leading the charge higher.

SHFE Copper ¥50,000 , 4.78%
SHFE Aluminium ¥14,060 , 1.30%
SHFE Zinc ¥24,015 , 3.07%
SHFE Nickel ¥88,760 , 2.70%
SHFE Rebar ¥3,425 , 4.04%
DCE Iron Ore ¥705.00 , 5.62%
DCE Coking Coal ¥1,197.50 , 3.37%
DCE Coke ¥1,656.50 , 5.48%

Pretty punchy scorecard, right?

After surging 7% on Friday, iron ore futures have added another 5.62% today, leaving the May 2017 contract at the highest level seen since July 2014.

It has now rallied 18% from the lows of February 7, just four trading sessions ago.

The latest rally — enormous even by recent standards — has been driven by a familiar theme — optimism towards the outlook for Chinese steel demand.

“Mills’ booking orders are quite good and they’re trying to produce as much as possible,” an unnamed iron ore trader in Shanghai told Reuters. “People are expecting demand in the spring will be strong.”

Clearly they do, with the May 2017 rebar contract on the Shanghai Futures Exchange soaring by another 4% today, leaving it on track to close at the highest level since April 2014.

That sentiment was no doubt assisted by a story that ran in China’s Economic Information Daily newspaper, a state-run publication, which said China will invest over one trillion yuan in transport in 10 mid-west provinces this year as part of a poverty-reduction plan.

As a result of that optimism, traders said that steel mills were also replenishing stocks of iron ore after the Lunar New Year holiday in early February, perhaps explaining the outperformance in iron ore futures on Monday.

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