Iron ore made it four gains on the trot on Thursday, extending its gain this week to 6.26%.

And futures were up again in overnight trade, hinting that the rally isn’t finished yet.

According to Metal Bulletin, the spot price for benchmark 62% fines rose by a further 0.72% to $80.99 a tonne, leaving it sitting at the highest level seen since December 19 last year.

It now sits just 3.1% below the multi-year peak of $83.58 struck on December 12.

Prices for both lower and higher grade ores also rose, particularly the former which rose more than 1%, outperforming for the session.

Analysts at Metal Bulletin said that the ongoing rally coincided with another jump in Chinese steel prices.

“China’s spot rebar prices bounced back on Thursday following gains in the futures and billet markets,” it said. “Futures rose in the afternoon trading session along with the price of billet, which gave a boost to the spot rebar market.”

That strength corresponded with reports that China is planning further capacity cuts across its steel and coal sectors, this time from state-owned enterprises.

“China wants its major state-owned enterprises to eliminate almost 6 million tonnes of steel production and 24.7 million tonnes of coal capacity this year,” said Reuters, citing an article that ran in the state-run China Securities Journal

In 2016, China was aiming to cut 45 million tonnes of steel capacity and reduce coal capacity by 250 million tonnes.

While announcements about capacity cuts aren’t new — they’ve been around now for several months now, and quite often recycled from previously announced cuts — they still continue to support both physical and futures markets, and last night was no exception.

Futures in China were up again.

The most actively traded May 2017 iron ore future on the Dalian Commodities Exchange added a further 1%, closing the session at 612 yuan.

There were also strong gains recorded in rebar, coking coal and coke futures which rose by 0.44%, 0.92% and 2.02% respectively.

The correlation between all four contracts suggests that sentiment towards steel markets continues to dominate price movements, ensuring that other factors — such as Chinese iron ore port inventories rising to a 12-year high last week — are being discounted by investors.

Trade in Chinese futures will resume at Midday AEDT, around a hour before the release of Chinese trade data for December.