The spot iron ore price rallied hard on Monday, fitting with a substantial move in Chinese futures earlier in the session.
According to Metal Bulletin, the spot price for benchmark 62% fines rose by 76 cents, or 1.98%, to $39.06 a tonne.
The increase was the largest in percentage terms since October 8, over two months ago. Despite the increase, year to date the price has still fallen by 45.2%.
Pointing to the likelihood that the yearly loss will narrow further this evening, Chinese iron ore futures continued to rally in overnight trade.
According to the Dalian Metals Exchange, the most actively traded May 2016 contract rose by a further 1.56% to 293 yuan in overnight trade.
The January 2016 contract, now the front month contract and still carrying plenty of open interest, rallied even further, jumping 2.83% to 309 yuan. Given its proximity to spot, it suggests that there may be another hefty increase in the spot price when it is released later on this evening.
It was contract expiry in Dalian yesterday, so it’s uncertain whether the sharp rally in futures was as a consequence of traders rolling contracts over or renewed demand for ore. That question will likely be answered in the sessions ahead.
Trade in Dalian will resume at 12pm AEDT with the daily spot price fixing from Metal Bulletin released at 10pm AEDT this evening.
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