Iron ore just surged out of nowhere

Matt Roberts/Getty Images
  • Iron ore is on the charge, hitting a one-month high on Thursday.
  • Sentiment was helped by further strength in Chinese steel prices following positive news on demand.
  • Rebar and iron ore futures weakened modestly in overnight trade.

Iron ore is on the charge, hitting a one-month high on Thursday.

According to metal Bulletin, the spot price for benchmark 62% fines surged 2.2% to $68.49 a tonne, its largest gain in a fortnight.

It now sits at the highest level since May 14, extending its gain over the past 12 sessions to 7.2%.

While the benchmark price surged, the buying frenzy did not extend to lower or high grades on Thursday.

The price of 58% fines was flat at $39.19 a tonne while that for 65% fines rose by a modest 0.6% to $89 a tonne.

Once again, the bid in spot markets mirrored similar strength in Chinese steel prices.

Rebar futures in Shanghai finished the session at 3,897 yuan, another fresh multi-month high. That was up from Wednesday’s night session close of 3,879 yuan.

News that China’s state council will ban new steel production capacity in some parts of the country was cited as one factor behind the increase.

Data showing Chinese steel production hit the highest level on record last month also helped to boost confidence, especially at a time inventory levels continue to draw.

The strength in steel markets flowed through to iron ore futures in Dalian which inched higher to close at 473.5 yuan.

However, after posting solid gains during earlier in the day, both iron ore and rebar contracts softened slightly in overnight trade.

SHFE Rebar ¥3,867 , -0.39%
DCE Iron Ore ¥471.50 , -0.21%
DCE Coking Coal ¥1,243.50 , -1.27%
DCE Coke ¥2,165.50 , 0.21%

The declines in both were small, suggesting not too much should be read into the price action.

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

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