Having bounced by more than 4% in the final two trading sessions of last week, there may be more substantial gains on the way for the spot iron ore price.
After closing Friday’s evening session down 0.32%, Chinese iron ore futures ripped higher in early trade on Monday with the most actively traded May 2016 contract on the Dalian Commodities Exchange currently sitting up 3.9% at 320.0.
Putting that gain into perspective, the price can only rally 4% from the previous days settlement price, indicating that it is now close to trading limit up for the session.
The gains in iron ore mirror those seen in rebar futures with the May 2016 contract on the Shanghai Futures Exchange – that carrying the most open interest – also up by 2.87%.
On Friday the spot price for benchmark 62% fines settled at $41.12 a tonne according to Metal Bulletin, trimming 2016’s decline to 6%.
Should iron ore futures hold their gains over the course of Monday’s session, it points to the likelihood of a strong increase in the spot price being delivered later on this evening.
Metal Bulletin will announce Monday’s settlement level at 10pm AEDT.