The curbing of steel output and suspension of activity at steel mills in Northern China due to heavy smog have cause steel and iron ore prices to skyrocket at Chinese exchanges on Tuesday.
Rebar futures at the Shanghai Exchange were up 7% at 3,167 yuan or $457 per ton.
Dalian Commodity Exchange caught Australian traders by surprise with an 8% jump to a three-week high of 594 yuan per dry ton, the highest it has been since December 16.
On Monday, iron ore’s spot price at the Qingdao port was up 1.9 percent to $77.73 following a series of declines during the first week of January.
The price rally was seen all over the iron sector: coking coal was up by 7.8 percent at 1,268 yuan per ton, while coke itself was 9 percent higher at 1,687 yuan per ton.
Improving forecasts for the Chinese economy also bode well for steel prices, according to Helen Lau, analyst at Argonaut Securities.
On Tuesday, China’s National Bureau of Statistics reported that Chinese producer prices (PPI) rose 5.5% year over year in the last month of 2016.