Iron ore is back above $70 a tonne, rallying hard for a third consecutive session on Wednesday.
According to Metal Bulletin, the spot price for benchmark 62% fines jumped by 1.37% to $70.43 a tonne, extending its rally this week to 4.9%.
It now sits at the highest level since April 11, having added 32% from June 13.
Lower grade ores recorded even larger gains than the benchmark with the price for 58% fines leaping 2.9% to $48.54 a tonne.
According to analysts at Macquarie Bank, the recent strength across iron ore markets has been driven by restocking from Chinese steel mills.
“In addition to the generally positive macro sentiment toward China, iron ore has been supported by steel mill inventory restocking,” the bank wrote in a note this week.
“According to Mysteel data mill inventory has risen from 20.6 days in mid-June to 24.3 days by mid-July, and with strong profit margins mills are looking to continue to lift inventory which may continue to support prices near term.”
The gains on Wednesday also followed another strong increase in Chinese rebar futures, seemingly overriding a large reversal in iron ore futures during the session.
In overnight trade, Chinese futures rose slightly from Wednesday’s day session close, suggesting that the gains in iron ore spot markets may slow on Thursday.
Here’s the final scoreboard from Wednesday’s night session.
SHFE Rebar ¥3,580 , -0.31%
DCE Iron Ore ¥523.00 , -0.57%
DCE Coking Coal ¥1,276.00 , 0.31%
DCE Coke ¥1,947.00 , 0.21%
Despite the weakness indicated in the scoreboard, rebar and iron ore futures closed Wednesday’s day session at 518 yuan and 3568 yuan respectively.
Trade in Chinese commodity futures resumes at 11am AEST.