The iron ore price rebounded strongly on Wednesday, completely offsetting declines seen earlier in the week.
According to Metal Bulletin, the spot price for benchmark 62% fines rose by $1.35, or 3.29%, to $42.43 a tonne.
The increase, the largest in percentage terms since January 18, trimmed the year-to-date decline to 2.62%.
Renewed strength in steel prices was largely behind the strong rebound in the spot price.
“In the spot steel market, rebar prices in northern China rose as traders pushed up offers amid low market stocks, although few deals were concluded” wrote analysts at Metal Bulletin.
“Shrinking inventories prompted sellers to raise their prices in Beijing, even though buying interest remained weak ahead of the February 7-13 Chinese New Year holiday.”
Providing no clear indication on whether the rally will continue into a second session, Chinese iron ore futures rose modestly overnight while rebar futures fell.
The May 2016 iron ore contract on the Dalian Commodities Exchange rose by 0.62% to 323.5 yuan while the separate May 2016 rebar contract on the Shanghai Futures Exchange fell by 0.43% to 1,850 yuan.
Trade on both exchanges will resume at 12pm AEDT.
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