Iron ore is back above $70 a tonne, reclaiming the level for the first time since April 11.
According to Metal Bulletin, the spot price for benchmark 62% fines surged by 2% to $70.24 a tonne, extending its rally from June 13 to an enormous 31.6%.
The chart below shows the recovery over that period. In the past three sessions alone the benchmark has added 6.85%.
Both higher and lower grade ores also gained on Wednesday, albeit by a far smaller margin.
The price for 58% fines added 0.04% while ore with 65% Fe content rose by a larger 0.35%.
The gains coincided with another rally in Chinese steel prices, said Metal Bulletin, noting that a strong rebound in futures pushed up spot rebar prices during the session.
As seen in the final scoreboard for Wednesday’s day session, rebar and bulk commodity futures had another strong session, led by Dalian iron ore which closed at the highest level since May 3.
SHFE Rebar ¥3,679 , 1.77%
DCE Iron Ore ¥532.00 , 3.70%
DCE Coking Coal ¥1,255.00 , 1.41%
DCE Coke ¥1,945.50 , 2.23%
Some put the outperformance of iron ore down to short covering from speculators.
“Some short-position investors have pulled out of iron ore, helping to push prices up,” an analyst at CITIC Futures told Reuters. “If spot prices can move upward, the September iron ore contracts is expected to extend gains.”
Others put the move down to low rebar inventories and strong demand, helping to support steel, coking coal and iron ore prices.
News that Chinese iron ore production rose by 5% year-on-year in June to 124.7 million tonnes also did little to stymie iron ore’s advance.
However, in overnight trade Chinese futures reversed their earlier session gains, hinting that the breakneck rally over the past few days may pause for breath on Thursday.
Dalian iron ore slid 0.57% to 524 yuan while rebar futures closed down 0.66% at 3,622 yuan.
Trade in Chinese futures will resume at 11am AEST.