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Iron ore's best June since 2009
Source:Sydney Morning Herald   Time:2017-07-03 10:57:43

Spot iron ore prices were set to post their biggest gain for the month of June since 2009 after this week's rally fuelled by a stronger futures market in China.

Iron ore surged to an eight-week high near $US65 a tonne as physical traders took their cue from rising Chinese futures, lifting daily volumes on physical trading platforms in China and Singapore to the highest level this year.

"I think the big reason for the sharp increase in spot prices was the strength in the paper market," said a trader in Beijing. "But I am not too optimistic going forward because there's still too much supply."

Chinese iron ore futures climbed 9.7 per cent this week as investors piled back into a market they sold down in recent months and as steel prices also recovered. But in a sign of investor fatigue, iron ore futures gained only marginally on Friday after a four-day rally.

Iron ore for delivery to China's Qingdao port edged 0.4 per cent higher to $US64.95 a tonne on Friday, according to Metal Bulletin.

The spot benchmark advanced 14 per cent on the month, effectively matching its gain this past week alone, to post its biggest monthly rise since October, but the largest for the month of June since 2009.

Still, the steelmaking commodity has lost 19.5 per cent for the second quarter, after steep losses in April and May.

"We continue to believe that as long as steel margins remain elevated, iron ore prices have upside potential as steel mills will look to increase production," Commonwealth Bank of Australia analyst Vivek Dhar said in a note.

The most-active iron ore on the Dalian Commodity Exchange closed up 0.5 per cent at 473.50 yuan ($US70) a tonne. The contract touched a five-week high on Thursday.

"Capital started to flow out since yesterday afternoon. The central bank's statement this morning triggered more money to dash out from the bulk commodity sector," said Xu Bo, analyst, Haitong Futures.

China's central bank said it will skip open market operations for a sixth straight day on Friday with maturing reverse repos expecting to drain a net 330 billion yuan from the market for the week, the most since early February.

Coking coal rose 0.9 per cent to 1119.5 yuan a tonne, after soaring nearly 8 per cent on Thursday. Coke rose 0.9 per cent to 1752 yuan a tonne.

Rebar on the Shanghai Futures Exchange climbed 1.7 per cent to 3347 yuan per tonne.

China will send inspection teams in August to check the results of a crackdown against low-grade steel producers to prevent these mills from reopening, the state-backed China Metallurgical News reported.


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