Iron ore spot markets rose strongly on Tuesday, dragged higher by yet another surge in Chinese commodity futures following several days of losses.
The spot price for benchmark 62% fines rose by 1.92% to $US82.69 a tonne, according to Metal Bulletin, leaving it just shy of the multi-year peak of $US83.65 a tonne struck on January 16.
Both higher and lower grade ores also rose, outpacing the gain in the benchmark price having fallen previously on Monday.
The rally in spot markets coincided with yet another unbelievable move higher in Chinese futures following several days of losses.
“Investors are probably building positions in belief that prices may go up after the holiday which will be supported by restocking,” Richard Lu, analyst at CRU consultancy in Beijing, told Reuters.
He also said that enthusiasm was largely contained to futures, with physical markets slowing to a crawl ahead of Lunar New Year celebrations.
“We can barely hear offers and bids in the physical market right now, they’re very scarce,” he said.
After Tuesday’s spectacular rally, Chinese futures eased overnight, closing well below the highs struck during the previous day session.
Iron ore futures closed up 0.55% at 637.0 yuan, well below the 7% plus gains that were seen at one point on Tuesday.
It was a similar story for rebar, coking coal and coke futures which all closed well off their previous session high.
Trade in Chinese futures will resume at Midday AEDT.
SHFE Copper ¥47,940 , 1.78%
SHFE Aluminium ¥14,165 , 2.39%
SHFE Zinc ¥22,950 , 1.08%
SHFE Nickel ¥82,480 , -0.06%
SHFE Rebar ¥3,281 , 0.55%
DCE Iron Ore ¥637.00 , 0.55%
DCE Coking Coal ¥1,193.50 , -1.36%
DCE Coke ¥1,619.00 , -1.55%