Iron ore spot markets continued to grind higher on Wednesday with modest gains recorded across the board.
According to Metal Bulletin, the price for benchmark 62% fines rose 0.1% to $67.92 a tonne, logging its fifth gain in the past six sessions.
It now stands just two cents shy of the two-month high of $67.94 a tonne struck on Friday last week.
Like the benchmark, both lower and higher grades eked out gains on Wednesday.
The price of 58% fines rose by 0.3% to $37.83 a tonne while ore with 65% Fe content added 0,7% to $83.90 a tonne.
The across-the-board gains followed another spike in Chinese rebar futures on Wednesday.
The most actively traded May 2018 contract in Shanghai jumped 2.6% to 3,957 yuan. It briefly spiked to as high as 3,966 yuan, the highest level since September 14, benefiting from news that authorities in China’s Hebei Province — an industrial hub in China’s north east — have ordered steel mills to limit production between December 1 to 4 in anticipation of adverse weather conditions.
According to Thomson Reuters, citing a statement from the department of Environmental Protection in Hebei, heavy smog is predicted in early December across northern provinces, leading to the decision to introduce emergency measures to help improve air quality.
On top of existing production cuts that are scheduled to run through to mid-March, this latest supply disruption, coming at a time when rebar inventories held by Chinese traders are at the lowest levels in six years, helps explain why prices continue to scoot higher.
The ongoing rally in steel prices helped to boost iron ore futures in Dalian with the May 2018 contract rising 2.1% to 512.50 yuan during the session.
And, as seen in the scoreboard from Wednesday’s night session, futures continued to surge in overnight trade.
SHFE Rebar ¥3,989 , 2.31%
DCE Iron Ore ¥515.50 , 1.98%
DCE Coking Coal ¥1,381.50 , 3.60%
DCE Coke ¥2,126.00 , 2.36%
The strength in futures points to the likelihood that spot markets will follow suit on Thursday.
Trade in all commodity contracts will resume at midday AEST.