Iron ore has jumped nearly a fifth in value overnight, marking a continuing strengthening of the commodity over the year to date.
The metal experienced a major recovery in the market, as ore with 62 per cent grades jumped nearly a fifth to US$63.47 per tonne.
At the Port of Tianjin the overnight movement turned into the single largest one day gain ever as it rose to US$62.60 per DMT, marking a 46 per cent since the start of 2016 and a more welcoming market for iron ore.
Iron ore has now risen close to 70 per cent above the recent low watermark price of US$37 it rested at only a few months ago.
“The iron ore and steel markets have gone berserk — they’ve departed from fundamentals and are heavily driven by sentiment,” Zhao Chaoyue, an analyst at China Merchants Futures Co in Shenzhen, told Bloomberg.
He pointed to additional expected monetary easing by the Chinese Government as a driver for steel demand.
This commodity rise has lifted all the major miners, with BHP and Rio recording slight upticks in share price.
Fortescue saw the largest upwards movement, rising nearly a quarter in value, as the miner also announced an MoU between it and Vale, with the companies proposing to blend their high grade iron ores.
The agreement also provides a framework for potential investment by Vale in Fortescue through a minority acquisition of shares on market and/or investment in current of future mining assets.
However iron ore’s current growth is expected to soon run its course.
“We expect the current rally to be short-lived,” Goldman Sachs analysts Christian Lelong and Amber Cai noted in a recent report, according to Bloomberg.