Iron ore’s losing streak came to a spectacular end on Thursday, bouncing back above the $40 a tonne level having fallen in the previous seven sessions.
According to Metal Bulletin, the spot price for benchmark 62% fines rose by 1.8%, or 71 cents, to $40.22 a tonne.
The increase was the first recorded since January 4, and trimmed the year-to-date loss to 7.7%.
Suggesting that the gains will likely continue into a second session, Chinese iron ore futures ripped higher in overnight trade with the most actively traded May 2016 contract on the Dalian Commodities Exchange jumping by 2.49% to 309 yuan.
If sustained during today’s day session, beginning at 12pm AEDT, it points to the likelihood of another hefty increase in the spot price later on this evening.
The gains in spot and futures pricing came despite a sharp slowdown in Chinese steel production in late December.
According to Metal Bulletin, member mills of the China Iron & Steel Association (CISA) produced crude steel at an average daily rate of 1.52 million tonnes in late December, down 3.4% from the preceding period, according to estimates from the industry body reported yesterday.