Chinese iron ore traders just drove futures to a 2-year high

Photo: Oleg Nikishin/Getty Images

As it has done so often over the past month, the smallest pullback in the iron ore price was met with yet another wall of buyers on Thursday, especially in Chinese futures.

According to Metal Bulletin, the spot price for benchmark 62% fines rose by a further 0.23% to $65.46 a tonne, extending its gain in 2016 to over 50%.

It currently sits at the highest level seen since April 29.

The gains for lower and higher grade ore were even larger than that registered in the benchmark price.

And, if Dalian futures are anything to go by, the strength in spot markets looks set to continue on Friday.

The January 2017 contract surged by 2.73% in overnight trade, finishing the session at 508 yuan. It hasn’t closed at these levels since January 2015.

There were also enormous gains seen in related markets with rebar, coke and coking coal futures all logging gains in excess of 3%.

Analysts at the Steel Index said that a new round of emission control-related steel production cuts in Tangshan began on Thursday.

Tangshan is a major steel producing city in Northern China.

The last time emission-related cuts were implemented in the city it corresponded with huge increases in steel prices, helping to lift bulk commodity prices in the process.

Whether that was the main catalyst behind the enormous rally seen on Thursday is, as so often the case with Chinese commodity futures, unknown.

Trade in Chinese futures will resume at midday AEDT.

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.