The spot price for benchmark 62% fines soared by 3.2% to $90.93 a tonne, taking it back above the $90 a tonne

20 Mar 2017

Iron ore spot markets rocketed higher on Thursday, recording their largest jump in over a month. And the benchmark price is now back above $90 a tonne, thanks in part to another ridiculously large surge in Chinese futures.

The spot price for benchmark 62% fines soared by 3.2% to $90.93 a tonne, taking it back above the $90 a tonne level for the first time since March 3. It has now gained 15.3% so far in 2017, coming on top of a 81% rise a year earlier. Gains were evenly spread across both higher and lower grade ores. The price for 58% fines outperformed all others, soaring 3.6% to $62.60. The gains followed another huge increase in Dalian iron ore futures which rallied 5.5% from the prior session’s close.

While that may have been partially helped by strength in rebar prices and optimism generated by strong Chinese industrial data released on Tuesday, the surge came immediately after trading fees were slashed by the Dalian Commodities Exchange for iron ore futures, a trial move designed to encourage more institutional involvement in the market.

Given the scale of the gains so far, it appears that it has only encouraged speculators to bid up prices further, leading to strong gains in spot markets as well.

“A bullish day on the iron ore futures resulted in a 5.46% jump on the most active contract, while rebar futures rose 1.56%,” said analysts at The Steel Index. “Sellers of spot ore dramatically hiked their offers, with bids following.”

And the bullish price action continued in futures markets overnight, hinting that similar action in spot markets may not be finished yet.

Source –  www.businessinsider.com.au