After a week-long holiday in China, iron ore prices rose on Friday with market participants optimistic about demand prospects for the raw material in the world’s top steel producer.
Due to China’s electricity shortage, electric arc furnaces that use iron scraps to produce steel are at risk of being shut down, which means blast furnaces that use iron ore must produce more steel.
The most-traded January iron ore was 4.9% higher $118.24 a tonne Friday morning rising to $122 today, its strongest since September 6.
Also due to China’s power usage, coal is now being burned at 2014 levels.
The trading since China returned from their golden week may have some relationship to the moves in the Australian dollar today, which has taken advantage of a North American bank holiday which celebrates Columbus Day. Significant resistance is a lot higher towards 0.7600, with major support coming in just above 0.7030.
The yen continues to fall against all its peers though it has continued pushing to 113.40 while the US10 year yields have stalled with the bond markets being shut today. Chances are that the USDJPY may have to give back some of these gains today or maybe there will be a harder drop in the US treasuries tomorrow.