Prices of iron ore shoot up as speculators weigh in

Shanghai

WITH a huge global steel glut and slowing demand in China, an enormous recent spike in the price of iron ore has left analysts scratching their heads, with some even claiming a flower show might be to blame.

But observers say the extraordinary movements for one of the world's basic bulk commodities have been fuelled by something far more prosaic than daisies and daffodils - simple speculation.

The spot price for iron ore - the key material for steel - jumped 20 per cent on the Dalian Commodity Exchange on Monday last week.

It closed at US$57.35 per tonne on Friday, up nearly 33 per cent so far this year.

But the vast majority of trades on the exchange do not reflect real-world transactions: the iron ore futures volume on Wednesday alone represented an underlyi…