Iron ore prices are suddenly charging higher

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  • Iron ore spot and futures prices jumped on Wednesday, underpinned by strong Chinese property data and a modest liquidity boost from the People’s Bank of China.
  • The benchmark spot price now sits at the highest level since March 22.
  • Chinese iron ore futures surged by over 4% overnight, pointing to the likelihood of further gains in spot markets on Thursday.

Iron ore prices ripped higher on Wednesday, logging the largest increase since late March.

And with futures charging higher again in overnight trade, it looks like there may be a lot more upside to come.

According to Metal Bulletin, the spot price for benchmark 62% fines jumped 2.1% to $65.88 a tonne, its largest percentage gain since March 29.

The benchmark now sits at the highest level since March 22.

Like the benchmark, both higher and lower grades recorded solid gains for the session.

The price for 65% and 58% fines both added 2.3%, finishing trade at $83.90 and $38.60 a tonne respectively.

Spot markets were undoubtedly assisted by bounce in Chinese futures in overnight trade on Tuesday, a move that extended into Wednesday’s day session.

Rebar futures in Shanghai finished at 3,446 yuan, up marginally from Tuesday’s night session close of 3,442 yuan a tonne. Iron ore futures in Dalian put in a similar performance, ticking up to 449 yuan from the prior session’s close of 446 yuan a tonne.

A cut to the reserve ratio requirement for some Chinese lenders from the People’s Bank of China on late Tuesday, along with signs that China’s property market slowdown is now showing signs of easing, were cited as two catalysts that supported the move in futures.

Mirroring the strength seen across broader commodity markets on Wednesday, both contracts continued to rally in overnight trade.

As seen in the scoreboard below, Dalian iron ore had a particular strong night, closing at the highest level since April 3.

It’s now added over 7% in just the past three trading sessions.

SHFE Rebar ¥3,487 , 1.16%
DCE Iron Ore ¥465.00 , 4.26%

The strength in futures points to the likelihood that spot markets will extend their winning streak to three on Thursday.

Trade in Chinese commodity futures will resume at 11am AEST.

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