After rallying nearly 10% over the past two sessions, you’d be forgiven for thinking the iron ore rally was due a breather. However, if Chinese iron ore futures are on the money, there could be even larger gains ahead.
The most actively traded September 2016 contract on the Dalian Commodity Exchange is currently up 6% at 424.5 yuan, leaving it on track to close at the highest level seen since June 29 last year.
The gain is so substantial it has reached limit up for the session, meaning it cannot rise any further today given contract specifications implemented by the Dalian Exchange.
The chart below reveals the bullish price action in futures seen in recent sessions.
The renewed surge followed news that Chinese iron ore imports rose to 85.77 million tonnes in March, an increase on the 73.61 million tonne figure reported in February.
Over the past year imports rose to 969 million tonnes, the highest 12-month total on record.
Strength in Chinese steel prices — courtesy of tight supply before a government-enforced curtailment of production in Tangshan during a horticultural exhibition beginning this month — along with signs that Chinese construction activity is accelerating, have acted in unison to boost the price of iron ore in recent weeks.