Iron ore rallies

MANILA: Iron ore futures in China soared as much as 8 percent to a three-year peak on Monday, lifted by strong gains in steel prices that continued to benefit from Beijing´s campaign to slash excess capacity.

The sharp price increases in steel and iron ore, as well as other raw materials coking coal and coke, suggest speculative investors took advantage of upbeat sentiment for the sector to raise bets in these commodities as they did last year. The most-active iron ore on the DCE hit the exchange-set ceiling of 657.50 yuan ($95) a tonne, its strongest since January 2014, before closing 7.2 percent higher at 653 yuan. Construction steel product rebar on the Shanghai Futures Exchange climbed 5.2 percent to end at 3,375 yuan per tonne after earlier touching a one-month peak of 3,418 yuan. Both steel and iron ore posted their best week since November last week after China said it would shut down production of low-grade steel products by end-June, its boldest effort yet to tackle overcapacity and pollution. "There has been an improvement in sentiment since last week and I think there are more speculative" forces at play, said Wang Di, analyst at CRU consultancy in Beijing.