Iron ore spot markets continued to rip higher on Tuesday, surging to yet another multi-year high in the process.
With Chinese futures down overnight, the run towards the $100 a tonne level looks like it may have stalled for the moment.
According to Metal Bulletin, the spot price for benchmark 62% fines jumped by a further 2.73% to $94.86 a tonne, leaving it at the highest level since August 11, 2014.
It’s now gained 20.3% in 2017, after a 81% surge in 2016. And it’s now risen close to 150% from the lows struck in early December 2015.
Quite the recovery.
Metal Bulletin said the continued surge was once again driven by steel prices.
“China’s spot rebar prices continued to surge on Tuesday on the back of big gains in the billet market,” the group said. “The price of billet rose to its highest in four years. This gave a big boost to spot rebar prices.”
And that may have been driven by a resumption of infrastructure investment after the Lunar New Year holiday.
“Revival of infrastructure investment has been driving demand for steel and hence iron ore,” Wang Fei, an analyst at Hua’an Futures, told Reuters.
The gains in the benchmark price outpaced those in lower grade ores, no doubt assisted by renewed strength in coking coal and coke prices following a decision from China to ban imports from North Korea late last week.
Higher grade ores allow steelmakers to reduce the amount of coking coal required to produce steel, hence tend to benefit when coal prices increase.
However, after rallying 5% in the first two trading days of the week, there’s signs that the bullish run may be coming to an end.
Chinese futures all fell overnight, something of an anomaly given the price action seen in recent weeks.
The May 2017 iron ore future fell 0.62% to 723 yuan, a sharp reversal on the levels seen during Tuesday’s day session.
Rebar, coking coal and coke futures also went into reverse, sliding 1.1%, 1.6% and 2% respectively.
SHFE Copper ¥49,250 , 0.10%
SHFE Aluminium ¥14,310 , -0.21%
SHFE Zinc ¥23,360 , -0.34%
SHFE Nickel ¥90,110 , -1.92%
SHFE Rebar ¥3,549 , -1.11%
DCE Iron Ore ¥723.00 , -0.62%
DCE Coking Coal ¥1,252.00 , -1.61%
DCE Coke ¥1,714.50 , -2.03%
Trade in Chinese commodity futures will resume at midday AEDT, just 30 minutes before the release of Chinese house price data for January.
As a major source of end-user steel demand in China, this report could prove to be influential, particularly if there’s signs that the slowdown in major centres seen in recent months has spread to China’s smaller cities.