Iron ore pulls back from $120 despite fresh Chinese infrastructure spending

Benchmark 62% spot iron ore entered China's Golden Week holiday at $104.20 a tonne recovering from the worst quarterly performance in history.

On Monday upbeat Chinese traders – China consumes some 60% of the world's seaborne iron ore – came back from the break and chased the price of the commodity up 6% to $110.40, the biggest one-day jump in the price of the steelmaking raw material in almost a year.

Another 6% gain on Tuesday brought it to within shouting distance of the psychologically important $120 a tonne level – $120 has long been thought to be the long term price floor for the industry.

Thursday saw a pull-back to $115.80 according to data from Steelindex despite news that the country's railways ministry is upping its planned investment for a third time this year – the 2012 budget now stands at nice round $100 billion.

Despite Thursday disappointing trade, iron ore has still managed to claw back more than a third of its value since hitting a three-and-a-half year low of $86.70 barely five weeks ago.

Image of construction in China by ernop