Iron ore is just below $70 a tonne after rallying 30% in a month

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Iron ore is on some kind of rally.

Prices jumped to a fresh multi-month high on Tuesday, and with futures continuing to rip higher overnight, it looks like the move will continue today.

According to Metal Bulletin, the spot price for benchmark 62% fines surged by 3.04% to $68.84 a tonne, leaving it at a level not seen since April 11 this year.

It’s now added 29% in a little over a month.

Making the move in the benchmark appear small, the price for 58% fines rocketed by 5.74% to $48.80 a tonne during the session.

Brazilian ore with 65% Fe content added a smaller 1.19%, finishing trade at $85.30 a tonne.

The enormous gains in spot markets, especially across lower grades, followed an equally large surge in Dalian futures earlier in the session. The September 2017 contract added a lazy 5.3%, finishing the day session at 517 yuan per tonne.

Coking coal also rallied, jumping 3.4% to 1243.5 yuan per tonne.

Those moves came despite modest weakness in rebar futures during the session.

Some market participants put the divergence down to speculators moving into bulk commodity contracts following strong gains in steel prices in recent days.

“Considering big margins on steel products, mills have great incentive to churn out production, which requires them to purchase more raw materials,” Xu Bo, analyst at Haitong Futures, told Reuters. “Since rebar prices have risen rapidly in recent days, speculators now are turning to raw materials market.”

Whether that was case or not, the bullish price action continued across futures markets overnight, including in rebar contracts.

Here’s the closing scoreboard.

SHFE Rebar ¥3,643 , 0.77%
DCE Iron Ore ¥528.50 , 3.02%
DCE Coking Coal ¥1,270.50 , 2.67%
DCE Coke ¥1,929.50 , 1.39%

Some massive gains, especially for iron ore which closed at the highest level since May 3.

Should those gains be maintained or built upon today, it suggests the benchmark spot price could test the $70 a tonne level when Metal Bulletin releases its daily Iron Ore Index after 8.30pm AEST.

Trade in futures will resume at 11am AEST.

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