Iron ore spot markets rose for a second consecutive session on Wednesday, and with Chinese futures continuing to rip higher overnight, it suggests that upward momentum may continue on Thursday.
The benchmark spot price for benchmark 62% fines rose by 0.29% to $82.25 a tonne, according to Metal Bulletin, while 58% fines added a larger 1.27% to $56 a tonne.
The move followed a larger gain of over 3% in Chinese futures earlier in the session, and was driven by improved market activity, said Metal Bulletin.
“(It was) a busy day in the spot market today with a large number of cargoes being traded,” the group said, noting that the pickup in both volumes and prices was assisted by renewed strength in steel prices, particularly in futures markets.
“Spot prices rose in both the eastern and northern regions following a big jump in the paper market during the day,” it said, citing market sources.
The strength in iron ore markets also came despite another rise in Chinese port inventories with stockpiles rising by a further 1.45 million tonnes to 132.45 million tonnes last week, according to data from Shanghai Steelhome, the highest level since port stocks were first tracked in 2004.
Market participants have suggested that much of the ore stockpiled is lower, less desirable grades, with higher grade ore still in strong demand.
Although at record highs, some analysts have also pointed out that inventory levels measured in days usage are also no higher than usual right now.
In overnight trade, and pointing to the likelihood of further gains in spot markets today, Chinese iron ore and rebar futures continued to rip higher, recovering after severe losses were recorded last week.
The September 2017 iron ore contract on the Dalian Commodities Exchange jumped by 2.94% to 578 yuan, while rebar futures traded separately on the Shanghai Futures Exchange rose by a smaller 1.61%, closing the session at 3,225 yuan.
Coking coal and coke futures continued to outperform, logging gains of 3.99% and 4.94% respectively.
SHFE Rebar ¥3,225 , 1.61%
DCE Iron Ore ¥578.00 , 2.94%
DCE Coking Coal ¥1,225.50 , 3.99%
DCE Coke ¥1,763.50 , 4.94%
The sharp rebound in Chinese commodity futures in recent days, following an even larger decline last week, is likely to have been driven by market speculators.
Trade in Chinese commodity futures will resume at midday AEDT.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.