AUD Bullish: Dalian iron-ore futures refresh record high
- Dalian iron-ore futures soar nearly 4.0% to 8.0% for most contracts.
- Vale cuts supply forecasts, Aussie-China tussle mostly ignored.
The most actively traded contract for China’s benchmark iron ore futures, traded on Dalian Commodity Exchange, surge over 7.0% on early Friday to refresh the record high near $150.00. With Australia’s key export item rising to the all-time top, AUD/USD follows the suit while probing a 30-month peak above 0.7500, currently up 0.32% to 0.7561.
Read: AUD/USD Price Analysis: Bulls extend in the monthly impulse
While the May contract rose to 981 Chinese yuan, other contracts ranging from December 2020 to March 2021 also jumped between 4.0% and 8.0% during the latest run-up.
Although hopes of the coronavirus (COVID-19) vaccine and China’s successful recovery from the pandemic could be identified as helping the commodity prices, successive cuts in the 2021 output forecasts by major iron ore producer Vale also favored the prices. In this regard, Australiamining said, “This is propped up by a reduced supply estimate from Vale, which is likely to produce 300-305 million tonnes for this year, falling short of its previously downgraded 2020 target of over 310 million tonnes.”
Given the likelihood of further recovery in global economics, due to the covid vaccine discovery and likely US stimulus, iron ore seems to have further upside to trace. Though, UBS spots fears of Canberra-Beijing tussle, while also highlighting a new supply including at the giant Simandou iron ore project in Guinea, Africa, to suggest a cautious move.