Almost by stealth, spot iron ore prices hit another multi-year high on Monday.
And with Chinese futures soaring again overnight, it suggests the bullish move may not be finished yet.
According to Metal Bulletin, the spot price for benchmark 62% fines jumped by 2.18% to $92.34 a tonne, surpassing the previous multi-year peak of $92.23 a tonne struck on Monday last week.
It now sits at the highest level since August 20, 2014.
The enormous surge took the year-to-date gain to 17.1%, having already soared over 80% in 2016. From the lows of mid-December 2015, it’s now rallied by over 140%.
Both lower and higher grade ores actually outperformed the benchmark rate, rallying more than 2.5% for the session.
Analysts at Metal Bulletin put the renewed surge in spot markets down to ongoing strength in Chinese steel prices.
“Billet demand strengthened on Monday morning, which encouraged traders to raise their offers by large amounts,” the group said on Monday. “Rebar traders followed suit with increases of their own.”
Higher steel margins have been cited as one factor that have supported iron ore prices in recent months, allowing mills to pay higher prices — particularly for higher grade ores — that what had been paid in previous years.
Traders were split on the reason behind the strength in steel markets.
Some cited strong demand and tight supply following Chinese New Year celebrations, while others pointed to China’s ban on North Korean coal imports as a factor that would make steel production, hence end user prices, more expensive.
Whatever the reason, whether one or the other, a combination of both or other factors, it continued to buoy Chinese commodity futures in overnight trade.
The May 2017 iron ore future on the Dalian Commodities Exchange closed the session up 3.12% at 727 yuan.
That move was reflective of strength in rebar, coking coal and coke futures which also gained 2%, 1.67% and 2.2% respectively.
Trade in Chinese commodity futures will resume at midday AEDT.