Iron ore went nuts overnight, with futures pointing to another enormous rally today

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Iron ore’s wild price action continued again overnight, surging more than 4% after four days of consecutive losses.

According to Metal Bulletin, the spot price for benchmark 62% fines rose by 4.2%, or $2.57, to $63.66 a tonne — the first gain seen since Thursday last week.

Due in part to a surge in speculative forces in Chinese iron ore futures, the price movements over the past month have been crazy.

Over the past 15 sessions, the price has recorded a loss or gain of more than one percent on 14 occasions. In nine of the past ten days the price movement has been more than 2.7%, either to the upside or downside.

Suggesting that the wild price movements will continue today, and hinting that higher margin requirements and trading fees are doing little to quell speculative forces in Chinese commodity futures, Chinese iron ore, rebar and coking coal futures took off in overnight trade, bouncing strongly after several days of losses.

The most actively traded iron ore futures contract on the Dalian Commodities Exchange finished up 5.3%, mirroring a similar movement in coking coal futures.

Separately, rebar futures on the Shanghai Futures Exchange jumped by 3.07%.

In response to the jump in investor numbers trading commodity futures, the Dalian Exchange issued a statement overnight suggesting that it would strengthen its supervision and investigate trading violations following the surge in volumes this year, something that has seen the price for many bulk commodities surge more than 50%.

According to the Financial Times, citing a statement on the DCE website, the exchange said investors should maintain a “clear understanding” and increase the knowledge of the rules to maintain and orderly market.

It also said that this year alone a total of 212 traders had been given warnings, with 13 accounts closed.

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