Perhaps taking its cue from the late rally in Chinese stocks on Tuesday – something that pushed futures markets higher despite another weak trade performance from China in August – the iron ore price has continued its near gravity-defying rally overnight.
The spot price for benchmark 62% ore jumped by a further 57 cents, or 1.0%, to $57.42 a tonne, according to Metal Bulletin.
It now sits at the highest level seen since July 1, and extends the rally from the all time record low of $44.59 a tonne struck on July 8 to an impressive 28.8%.
Despite the ongoing rally since early July, prices have still fallen 19.4% year-to-date.
While iron ore futures markets were definitely influenced by the late surge in Chinese stocks – prior to the breakneck 106-minute stock surge they were down close to 2% – according to Metal Bulletin, the strength in spot prices was likely due to Chinese mills returning to the market to replenish stocks following a public holiday in the country last week, coupled with a supply shortage at Chinese ports.
Suggesting that there’s more of the rally to come, Dalian iron ore futures surged in overnight trade with the most actively traded December 2016 contract adding a whopping 17 yuan, or 4.44%, to 400 yuan.
That’s no mean feat. According to contract specifications it has already exceeded its maximum 4% daily ceiling, even before today’s day session has even started.
Whatever the explanation for the anomaly, if sustained today, it suggests there’ll be another hefty increase in the spot price later on this evening.
Trade in Dalian will resume at 11am AEST.
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