China's iron ore market structure goes into contango

Singapore

IRON ore is in very unfamiliar territory. As China presses home its campaign to curb steel production, some investors are starting to wager that after a chill in winter, a torrent of pent-up demand will spur a springtime rebound in a move that has shifted the shape of the futures curve.

On the Dalian Commodity Exchange, deliveries in May are now more costly than nearer-term supplies for January, reversing the typical pattern that has held true for months. The new market structure is known as contango - and for iron ore investors, it is an unusual sight.