Chinese iron ore futures are staging a stonking rally on Wednesday, jumping more than 5% at the mid-session break.
The most actively-traded September 2017 contract on the Dalian Commodities Exchange currently sits up 5.04% at 479.5 yuan, taking it further away from the four-month low of 442.5 yuan struck earlier this week.
As the mid-session scoreboard shows, it’s not just iron ore futures that are going nuts but also rebar, coking coal and coke futures, too.
SHFE Rebar ¥3,098 , 3.86%
DCE Iron Ore ¥479.50 , 5.04%
DCE Coking Coal ¥1,055.00 , 3.69%
DCE Coke ¥1,558.00 , 4.18%
According to Helen Lau, an analyst at Argonaut Securities, the across-the-board strength is likely due to firm steel demand in China.
“Inventory of steel products held by Chinese traders has fallen 17% this year to 11.2 million tonnes as of May 12,” she told Reuters.
“Therefore, the underlying real steel demand remains healthy”.
Given the scale of the increase seen in iron ore futures, it points to the likelihood of a healthy pop in spot markets when Metal Bulletin releases its daily Iron Ore Index later in the session.
On Tuesday, the price for benchmark 62% fines rose by 0.61% to $61.17 per tonne, according to pricing from the group.