Chinese iron ore futures are on yet another gravity-defying rally

Photo by Christian Petersen/Getty Images

Iron ore spot markets rebounded on Monday, responding to yet another sharp move in futures earlier in the session.

According to The Steel Index, the spot price for benchmark 62% fines rose by 2% to $77.60 a tonne, essentially reversing a similar decline reported on Friday.

Despite strength in the benchmark price, that form didn’t carry through to lower grade ores which finished the session flat.

Analysts at The Steel Index said the surge was part of a broader commodities move in Chinese futures.

“The Chinese ferrous futures markets surged today, buoyed by bullishness in across commodities markets, with the most active DCE iron ore contract jumping 4.57% while SHFE rebar futures went up 3.57%,” the analysts wrote.

And given the tendency of spot markets to follow the lead provided by futures, it looks like there’ll be even larger gains to come on Tuesday.

Iron ore futures on the Dalian Commodities Exchange surged yet again overnight.

The May 2017 contract jumped by 4.73% to 576 yuan, mirroring similar gains in rebar, coking coal and coke futures which all gained between 3.82% to 4.34%.

The uniform nature of these moves suggests speculative activity remains rampant in these markets with fundamentals — such as Chinese iron ore port inventories remaining at the highest level seen in over two years — seemingly being overlooked for the moment.

  • SHFE Rebar ¥3,073 , 3.82%
  • DCE Iron Ore ¥576.00 , 4.73%
  • DCE Coking Coal ¥1,227.00 , 4.34%
  • DCE Coke ¥1,611.00 , 4.07%
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