The iron ore price continued to rip higher on Tuesday, leaving it at a fresh five-week high.
According to Metal Bulletin, the spot price for benchmark 62% fines jumped by a further $2.60 to $59.22 a tonne, taking its two-day rally to start the week to 9.6%.
The price now sits at the highest level seen since March 8, and leaves the year to date increase at a giddy 35.9%.
Analysts at Metal Bulletin put the continued surge down to strong gains in Chinese steel prices.
“Rebar dealers in northern areas raised offers further during the day amid the rising billet prices. In the east, buying interest was hit by the rain, but traders still lifted prices a little, backed by strong rebar futures,” said Metal Bulletin. “Prices in both regions are at their highest level this year.”
In a research note released on Tuesday, Vivek Dhar, a mining and energy commodity analyst at the CBA, noted that there were several factors working in the favour of steel prices at present.
“(It reflects) tighter steel markets as steel mills cut output in Tangshan, a major steel producing area in China. Tangshan steel mills are required to cut emissions by at least 50% on certain days during the Tangshan Horticultural Exposition, which is due to run from 29 April to 16 October,” says Dhar.
“Iron ore also rose as steel mills try to boost output before mandated output cuts and as mills take advantage of generally higher steel prices. Steel prices have remained supported as China provides temporary relief to its secondary sector via stimulus measures – both property construction volumes and manufacturing have improved more than forecast this year.”
Indicating that the rally in the spot iron ore price will likely extend into a third consecutive session, potentially lifting the benchmark price above $60 a tonne, Chinese rebar and iron ore futures continued to rip higher in overnight trade.
The most actively traded October 2016 rebar future on the Shanghai Futures Exchange rose by 2.47% to 2,369 yuan, outpaced by a 4.37% jump in the separate September 2016 iron ore future on the Dalian Commodity Exchange.
Both markets will resume trade at 11am AEST.
Around midday AEST, China will release international trade data for March, including figures on iron ore imports and steel exports.