Iron ore spot markets jumped to fresh multi-month highs on Wednesday, powered by strength in Chinese steel prices.
And with futures continuing to rip higher in overnight trade, it looks like that trend may continue today.
According to Metal Bulletin, the price for benchmark 62% fines surged by 4.3% to $65.17 a tonne, its largest increase since November 6.
It now sits at the highest level since September 21.
The strength in the benchmark was mirrored across the grades.
The price for 58% fines rose by 2.3% to $37.08 a tonne while ore with 65% Fe content added 3.2% to $83.40 a tonne.
The surge in spot markets followed yet another strong rally in rebar futures, helping to boost iron ore, coke and coking coal futures as a result.
The May 2018 rebar contract in Shanghai jumped 2.3% to 3,817 yuan, continuing to benefit from tight inventory levels and ongoing steel production cuts in China that are scheduled to run through to mid-March 2018.
Iron ore rode on the coattails of rebar’s surge, adding 2.8% to 498 yuan. Coking coal and coke futures also added more than 4% for the session.
As opposed to steel markets, these commodities appear to be rallying on expectation that demand for raw materials will surge following the conclusion of steel production cuts.
Suggesting that the move in iron ore spot markets may continue today, futures continued to push higher in overnight trade.
Here’s the final scoreboard from Wednesday’s night session.
SHFE Rebar ¥3,825 , 0.82%
DCE Iron Ore ¥508.00 , 3.15%
DCE Coking Coal ¥1,309.00 , 2.79%
DCE Coke ¥2,092.00 , 3.00%
Should futures hold or build upon those gains today when trade begins at midday AEDT, it points to the likelihood that spot markets will continue to push higher today.