Iron ore futures surge back into positive territory Monday
Boost from Chinese capacity cuts could make rally sustainable
Iron ore futures in Singapore have erased losses, with the SGX AsiaClear contract jumping as much as 7.3% on Monday to US$77.84 a metric ton, reports Bloomberg.
Chinese curbs on capacity are helping drive the gains, which also saw reinforcement bar on the Shanghai Futures Exchange gain the maximum 6.3%.
“Steelmakers are facing government-ordered capacity curbs at a time when orders are full and inventories are relatively low,” Zhao Xiaobo, an analyst at Sinosteel Futures Co., said in a note Monday.
“The production-curbs issue should not be taken lightly, given the potential to cause short-term disruption,” Daniel Hynes, senior commodities strategist at Australia & New Zealand Banking Group Ltd., was quoted as saying before the rally on Monday. “It’s certainly getting to a point where downside risks are being reduced week by week.”