The iron ore rally kicked back into gear on Thursday

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The iron ore rally kicked back into gear on Thursday, recovering all of Wednesday’s losses and more over the session.

According to Metal Bulletin, the price for benchmark 62% fines jumped 2.9% to $65.91 a tonne, leaving it sitting at the highest level since May 3.

From the recent low of $53.36 a tonne struck on June 13, it has now put on 23.5% — not a bad return in a month.

It also continued a bout of volatility in the benchmark price that is unusual even by its standards with the price having either gained or lost 2% or more in each of the past four sessions.

Mirroring the performance of the benchmark, both higher and lower grades ores also rose for the session.

58% fines added 2.7% while 65% Fe ore put on a smaller 0.5%.

The gains followed a surge in Chinese rebar futures earlier in the session, something that was partially driven by renewed speculation of capacity closures across the nation’s steel and coal sectors.

According to Reuters, citing a report from China’s Economic Information Daily newspaper, the government’s state assets regulator is planning a pilot scheme to push loss-making state-owned enterprises in coal and steel to tackle overcapacity.

In the past any speculation over capacity curbs has usually resulted in a burst of buying interest.

That likely explains the outperformance of rebar and coking coal futures during Thursday’s session, storming higher in comparison to iron ore futures which finished flat.

The most actively traded October 2017 rebar contract in Shanghai briefly hit a high of 3,660 yuan, leaving it at the highest level in nearly four years. Open interest in all rebar contracts also ballooned by 11,000 lots to 5.74 million contracts, a new record high.

Along with gains in steel markets, iron ore may have also been supported by the released Chinese trade figures for June, revealing total iron ore exports surged to 539 million tonnes in the first half of the year, up 9.3% on the same period in 2016.

After storming higher during Thursday’s day session, Chinese commodity futures softened in overnight trade, providing an early indication that the buying momentum across spot markets may wane today.

Here’s the final scoreboard from the night session.

SHFE Rebar ¥3,590 , -0.47%
DCE Iron Ore ¥478.50 , -1.95%
DCE Coking Coal ¥1,171.50 , 0.21%
DCE Coke ¥1,854.50 , -0.24%

Trade in Chinese futures will resume at 11am AEST.

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