Chinese iron ore futures surge to record highs

Christian Petersen/Getty Images for IAAF
  • Chinese iron ore futures on Monday surged to the highest level on record.
  • Supply disruptions from Australia and Brazil have been a major factor behind recent price gains in futures and physical markets.
  • Stronger steel prices in China may be another factor behind the price gains seen during the session.

Chinese iron ore futures surged on Monday, soaring to the highest level since trade first began on the Dalian Commodities Exchange back in 2013.

The May 2019 contract sits at 708.5 yuan at the mid-session break, up a hefty 3.81% from Thursday’s day-session close. Chinese futures were closed on Friday for a public holiday.

Thomson ReutersDalian iron ore futures. May 2019 daily chart.

The September 2019 contract — where slightly more open interest is now held among traders — is also up 3.75% at 650 yuan.

While supply disruptions from Brazil and Australia have been a major factor behind recent price gains in both futures and physical markets, the latest surge coincides with some big moves in Chinese steel futures traded separately on the Shanghai Futures Exchange.

The May 2019 rebar and hot-rolled coil contracts have climbed to 3,987 and 3,929 yuan on Monday, up 2.84% and 2.72% respectively from Thursday’s day session close.

Coking coal and coke futures in Dalian have also jumped, lifting to 1,260 and 2,048 yuan respectively.

A statement released by the Chinese government on Sunday, pledging further support for the economy, may explain the latest flurry of buying across steel and bulk commodity markets.

Warmer weather in China and demand for steel lift as construction activity ramps up, may be another factor behind the price gains seen on Monday, analysts said.

“The physical prices of steel have also increased over the last few days, driven by the seasonal demand improvement,” Richard Lu, senior analyst at CRU Group’s Beijing office, told Reuters.

NOW READ: Supply disruptions may see an ‘aggressive fall’ in Chinese iron ore inventories

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