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.”