On Tuesday iron ore prices closed at their highest level since the middle of March, which saw the benchmark iron ore spot price rocket.
Metal Bulletin recorded the price for 62% fines increased by 2.5% to $69.82 a tonne. It was the largest one day gain for iron ore spot prices percentage wise, expanding the rally from 30 August to 6%.
But this did not carry over to lower or higher grades in the same session. It’s no secret that iron ore prices have traded sideways for most of the year, despite being volatile.
Iron ore prices reflecting US trade tensions
This year saw trade tensions between China and US hit boiling point. Yesterday’s one day gain might suggest added support to China’s domestic economy from Chinese policymakers, after escalated tensions with the US.
An anonymous Shanghai-based iron ore trader told Reuters what investors can look forward to:
‘Investors expect a cut in banks’ reserve requirement ratio (RRR), which would bolster liquidity in the market and drive up prices across commodities…
‘People are waiting to see if macro-economic policy will shift.’
China’s National Bureau of Statistics revealed that production of iron ore fell to its lowest depths in eight years, following its downturn in August 2010. This only added to the volatile nature of iron ore prices, as well as helped support potential policy changes.
Meanwhile the gains in mid and higher grades were illustrated by strength in Chinese steel and iron ore futures. Similarly, Business Insider Australia reported that Rebar Futures in Shanghai ended at 4,167 yuan — up 1.4% which was 1% higher than Monday’s close.
This transferred to iron ore futures in Dalian, closing 1% higher in yesterday’s session. The same was in coking coal and coke contracts traded higher, concluding Tuesday’s session at 1,298 and 2,292 yuan respectively.
Will iron ore prices continue to trade wayward?
There’s little warning whether the iron ore prices will move higher or lower in the future. That said, it could be likely that Wednesday prices continue to rise. As all contracts barring coking coal continued to increase in overnight trade.
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