After falling below the $50 a tonne level for the first time since February 29 on Thursday, iron ore prices rebounded solidly on Friday, boosted by renewed strength in Chinese futures markets.
According to Metal Bulletin, the spot price for benchmark 62% fines rose by 3.38%, or $1.67, to $51.15 a tonne. It was the largest percentage gain recorded since April 29, and left the year to date gain at 17.4%.
Despite the late heroics on Friday, the benchmark price still lost 6.8% for the week.
The gains followed a sharp turnaround in Chinese rebar and iron ore futures late on Friday afternoon, swinging from a significant losses earlier in the session to multi-percentage gains by the close of trade.
The turnaround came just a day after senior market regulators gloated that they had conquered the commodity trading frenzy that gripped the nation in the early parts of 2016.
Based on the price action seen on Friday, perhaps they spoke too soon.
Indicating that further gains may arrive in the benchmark spot price on Monday, Chinese iron ore futures traded on the Dalian Commodities Exchange continued to push higher on Friday evening, gaining 1.31% to 349 yuan.
Monday’s day session will begin at 11am AEST.
Earlier this month Daniel Hynes, senior commodities strategist at ANZ, suggested that fundamental factors, rather than rampant speculation in Chinese commodity futures, was the main reason behind the resurgence in the iron ore price this year.
He suggested that underlying factors in the physical market — both from a demand and supply perspective — would likely support the spot iron ore price on any dip below US$50 a tonne over the period ahead.