Spot iron ore prices continued to rally on Wednesday, continuing the bullish price action seen earlier in the week.
According to Metal Bulletin, the price for benchmark 62% fines rose by a further 1.3% to $75.87 a tonne, extending its gain over the past two sessions to 7.9%.
It now sits at the highest level since November 14, and has rallied 74.1% this year.
Analysts at Metal Bulletin said the gains were prompted by continued strength in Chinese rebar futures, something that followed an announcement earlier in the week that industrial production, including steel, would be curbed in the northern Chinese city of Tangshan over the next four months due to environmental concerns.
ANZ’s commodity research team agreed with that view.
“Further closures of steel capacity in the Hebei province in China due to pollution issues has seen steel prices rebound over the past few days, dragging iron ore prices higher,” it said in a note released on Wednesday.
And despite far overstating the gain in spot markets seen on Wednesday — closing “limit up” 9% compared to a 1.3% gain in spot — it doesn’t look like Chinese iron ore futures traders are willing to give up on the rally yet.
They jumped again overnight, despite weakness in steel and other bulk commodity contracts.
The January 2017 iron ore contract on the Dalian Commodities Exchange finished at 626.5 yuan, a gain of 3.13%.
The move came despite a slight pullback in rebar and coke futures, seemingly making iron ore the odd one out.
Chinese iron port inventories currently sit near two-year highs, meaning supply shortages that have impacted coking coal and steel markets are not a consideration.
Chinese commodity futures will resume trade at Midday AEDT.