Iron ore is staging yet another explosive rally, rocketing higher once again on Tuesday.
And with Chinese futures climbing yet again in overnight trade, it looks like the move may extend into a fourth consecutive session today.
The spot price for benchmark 62% fines rose by a further 2.1% to $65.40 a tonne, according to Metal Bulletin, extending its gain over the past three sessions to 5.6%. The benchmark has now rallied 22.6% from May 13, seeing it re-enter a bull market.
It also sits at the highest level since May 3.
Other grades also put in a strong showing for the session.
The price of 58% fines added 2.1% to $45.21 a tonne, while Brazilian ore with 65% Fe content rose by a smaller 1.5%, finishing trade at $81.90 a tonne.
As was the case in previous sessions, Metal Bulletin said the buying spree was fuelled by continued strength in Chinese steel markets.
“Rebar futures made a strong showing during the day, which stimulated buying interest in the spot market,” the group said. “Providing additional support to spot prices was the strengthening billet market on the back of low inventory levels and strong demand.”
According to data from Shanghai Steelhome, Chinese rebar inventories stood at 3.74 million tonnes last Friday, leaving them just above a six-month low struck in early June. Inventory levels decline in the first half of the year on the back of increased construction activity during Spring.
High steel mill margins and low steel inventory levels have proven to be a potent mix recently, helping to lift not only steel production but also demand for its raw ingredients, including iron ore.
“The recent surge in iron ore prices reflects restocking demand, a shortage of medium and high grade ores and last, but not least, high steel mill margins,” said Vivek Dhar, mining and commodities analyst at the Commonwealth Bank, earlier this month.
And it looks like that surge will continue today, at least if the overnight moves in Chinese commodity futures are anything to go by.
They continued to climb, continuing the bullish price action seen over the past week.
Source; Business Insider