Iron ore surges to a fresh multi-month high

Photo by Michael Dodge/Getty Images

Iron ore markets surged for a second consecutive session on Friday, leaving the benchmark spot price at a fresh multi-month high.

According to Metal Bulletin, the price for 62% fines jumped by 3.35% to $77.94 a tonne, the highest level seen since April 6.

Over the past two sessions the benchmark has now gained a massive 6.8%, trimming its year-to-date decline to just 1.18%.

From the one-year low of $53.36 a tonne struck on June 13, it’s now soared by 46%.

Like the benchmark, both higher and lower grades rocketed higher during the session.

Ore with 65% Fe content rose by 2% to $97.50 a tonne, outpaced by a larger 2.76% jump in 58% fines to $51.78 a tonne.

Analysts at Metal Bulletin put the surged down to a late flurry of buying in Chinese rebar futures on Friday.

Rebar futures rose by close to 3% for the session, while the January 2018 iron ore contract on the Dalian Commodities Exchange soared by 6.6%, adding to a near-6% surge on Thursday.

That gain saw iron ore futures add 1.4% over the week, chalking up its eighth consecutive weekly gain in the process.

Traders put the strength in iron ore futures down to improved demand for higher grade ores.

“It’s a little hard to buy high-grade iron ore at the ports,” an iron ore trader in China’s port city of Rizhao told Reuters. “Supply is still the same as in the past month, but the demand for high-grade is increasing.”

However, after surging during Friday’s day session, Chinese futures have gave back some of their earlier gains on Friday evening.

Rebar futures on the Shanghai Futures Exchange closed up 1.12% at 3,866 yuan per tonne, off the highs of 3,900 a tonne struck earlier in the day. Iron ore futures also went into reverse, closing at 571 yuan per tonne, well off the 584 yuan per tonne level struck earlier in the session.

Here’s the final scoreboard from Friday’s night session.

SHFE Rebar ¥3,866 , 1.12%
DCE Iron Ore ¥571.00 , 2.15%
DCE Coking Coal ¥1,459.50 , -0.51%
DCE Coke ¥2,249.50 , 0.04%

While sentiment in futures can seemingly turn on a dime at present, should futures hold around these levels today, it points to risk of a small decline being recorded in spot markets when Metal Bulletin releases its daily iron ore index later this evening.

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

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