Chinese bulk commodity and rebar futures have surged out of the gate on Thursday, continuing the rally from earlier in the week.
And coking coal is having a whale of a session, currently sitting limit up 8%.
That’s right. The only thing preventing further gains at this stage is that market rules don’t permit it.
Here’s the scoreboard as at 12.05pm AEST.
SHFE Rebar ¥3,318 , 1.84%
DCE Iron Ore ¥481.00 , 5.37%
DCE Coking Coal ¥1,134.50 , 8.00%
DCE Coke ¥1,772.50 , 5.51%
The rally in coking coal and coke future may be explained by the tweet below.
China Port Bureau may ban coal/coke imports via 2nd-tier ports spurs DCE Coking Coal +6%, Coke +4.6%. Pushing up other commodities too…
— Simon Ting (@simonting) June 29, 2017
As he points out, other commodities have also followed suit, particularly iron ore which has added 5.48% to sit at 481.5 yuan per tonne, leaving it at the highest level since mid-May.
Disruptions to coal supply, potentially pushing up prices as a consequence, would normally benefit higher iron ore grades which are more efficient in steel production.
Others such as Robert Rennie, Westpac’s global head of macro strategy, suggest the move in iron ore may be merely catch-up to the strength in Chinese steel prices earlier this month.
— Robert Rennie (@R0bertRennie) June 28, 2017
Whatever is driving the move, be it those or more speculative factors, the latest buying spurt suggests spot iron ore markets will add to the 10% gain achieved in the previous two sessions.
The price for benchmark 62% fines surged 4.4% to $62.33 a tonne on Wednesday, according to Metal Bulletin, leaving it sitting at the highest level since May 22.