Iron Ore Has Best Day In History

Iron Ore prices clocked its best day ever, despite China wanting to cut excess industrial capacity, including steel.

Ore with 62 percent content delivered to Qingdao jumped 19 percent to $63.74 a dry metric ton, according to data from Metal Bulletin. That's the biggest gain in daily data going back to 2009 and the highest price since June.

Iron ore has advanced in 2016 amid expectations of further losses on increasing low-cost supply from Australia and Brazil and weakening demand for steel in China, which accounts for about half of global output.

The market sentiment turned bullish as a cut in steel capacity could raise prices for steel. Both commodities are related to each other steelmaking process starts with the processing of iron ore.

However, Goldman Sachs says the rally in iron ore will likely be short-lived as Chinese demand is unlikely to pick up strongly.

Shares of miner Cliffs Natural Resources Inc (NYSE: CLF) surged 18 percent. Cleveland-based Cliffs Natural Resources specializes in the mining and beneficiation of iron ore.

Among the heavy weights, Rio Tinto plc (ADR) (NYSE: RIO) were up 3 percent and BHP Billiton Limited (ADR) (NYSE: BHP) has gained 2 percent. Vale SA (ADR) (NYSE: VALE) also advanced 9 percent.