http://edge.alluremedia.com.au/uploads/*/2016/02/iron-ore-lead.jpgPicture: Getty Images
Iron ore prices have more than doubled from the all-time lows struck 11 months ago.
Doubled.
According to Metal Bulletin, the spot price for benchmark 62% fines surged 7.7% to $79.81 a tonne on Friday, extending its gain in 2016 to 83.2%.
It was the largest percentage gain since April 21, and the largest in dollar terms since March 7 when it jumped $9.99 a tonne.
Remarkable.
In the past month alone its surged 42.9%, leaving it at the highest level seen since October 30, 2014.
It’s now up 108.4% from December 11, 2015 — not a performance many expected even in recent months. If there is such a thing as a comeback for a commodity, this is surely it.
The Australian government is now taking a significant interest, with resources minister Matt Canavan quoted in media reports saying that the rally could add “billions” to the budget bottom line. “Donald Trump is good for fossil fuels, good for steel and good for Australia,” Senator Canavan said.
Here’s the chart: http://edge.alluremedia.com.au/uploads/*/2016/11/MBIOI-62-Nov-14-2016.jpg
And it may not be over yet. Dalian futures — a lead indicator on movements in the spot price over the past month — jumped again on Friday evening.
The most actively traded January 2017 iron ore future put on a further 2.16%, finishing the session at 615.5 yuan.
The continue surge came despite renewed weakness in rebar and coke futures over the same period, along with declines in base commodities.
It’s seemingly out on its own, potentially driven by increased trading fees on other futures contracts pushing traders to speculate on further price gains in iron ore futures as a consequence.
It hardly sounds like a solid, fundamentally-driven foundation to rally upon, but that hasn’t stopped the move seen in recent months.
Even with Chinese iron ore port inventories bulging at two-year highs, the rally just keeps on going.
Trade in Chinese futures will resume at Midday AEDT, an hour before the release of industrial output and urban fixed-asset investment figures from China for October.
FAS Price at posting:
0.4¢ Sentiment: Sell Disclosure: Held
