Out of nowhere, Chinese iron ore futures are suddenly on a tear.
The most actively-traded September 2017 contract on the Dalian Commodities Exchange has jumped by 4.87% to 452 yuan per tonne, leaving it sitting at the highest level since May 31.
It has now rallied 10% from the multi-month low of 412.5 yuan per tonne struck on June 14.
The strength has coincided with renewed buying in rebar futures on the Shanghai Futures Exchange.
The October 2017 contract currently sits up 3.18% at 3,214 yuan per tonne, leaving it on track to close at the highest level in five weeks.
That strength may have been in response to remarks from Chinese premier Li Keqiang earlier in the session that the government would continue to push ahead with capacity cuts across China’s steel and coal sectors.
SHFE Rebar ¥3,214 , 3.18%
DCE Iron Ore ¥454.00 , 5.34%
DCE Coking Coal ¥1,047.00 , 1.95%
DCE Coke ¥1,672.00 , 2.64%
The rebound in iron ore futures suggests that spot markets will likely make it eight gains in the past nine sessions when Metal Bulletin releases its daily Iron Ore Index later today.
On Friday last week, the price for benchmark 62% fines closed up 0.39% at $56.75 a tonne, according to the group.
Shares in Australian iron ore miners have also also responded positively to the move, particularly Fortescue Metals Group which jumped 3.84% to $4.87 during Tuesday’s session.