The iron ore price soared on Monday, reversing heavy losses seen in the two previous sessions of trade.
According to Metal Bulletin, the spot price for benchmark 62% fines jumped by 3.6%, or $2.08, to $60.36 a tonne.
Year to date the price has rallied 38.5%.
Yet again, the gains in the spot price followed strength in Chinese rebar and iron ore futures, with both contracts rallying hard upon the resumption of trade on Monday.
Gains extended throughout the session, boosted by another strong increase in Chinese new home prices in March, particularly in large tier-one cities.
Pointing to the likelihood of further gains in the spot iron ore price arriving on Tuesday, both rebar and iron ore futures continued to push higher in overnight trade.
The most actively traded October 2016 rebar future on the Shanghai Futures Exchange soared by 3.14%, narrowly shading a 2.51% increase in iron ore futures on the separate Dalian Commodities Exchange.
Trade in both contracts will resume from 11am AEST.
Despite the bullish price action in steel prices, something that has helped iron ore to its amazing yearly gain, analysts at Macquarie Capital don’t expect the strength in either to last, suggesting in a research note released earlier this week that it was unlikely to persist past mid-year.
“There is a good chance that even with macro data continuing to surprise on the upside the strength in ferrous prices may not last,” says Macquarie.
“This would be similar to the late 2012 and 3Q13 cyclical upturns we saw. Such mini-cycles have seen steel and iron ore break away from the underlying downtrend (thus outperforming expectations) for short periods, before correcting quickly.”