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China iron ore futures surge on hopes of resuming steel production

BEIJING -China's benchmark iron ore futures surged on Tuesday, hitting their 10% daily trading limit in morning session, as steelmakers are set to resume production after rigorous controls in the past few months following government orders.

China iron ore futures surge on hopes of resuming steel production

Man walks by the iron ore blending site at Dalian Port. Photo: Reuters

BEIJING -China's benchmark iron ore futures surged on Tuesday, hitting their 10% daily trading limit in morning session, as steelmakers are set to resume production after rigorous controls in the past few months following government orders.

"The supply-side of iron ore has not changed much recently, but more mills are planning to increase output next month," a Beijing-based trader said.

Another Shandong-based iron ore trader said the market is trading on expectation of rising steel production in December.

China had successfully controlled its January-October crude steel production at lower levels than the same period in 2020 after a raft of strict curbs and sluggish downstream demand, leaving room for steel firms to raise output for the rest of the year on a monthly basis.

The most actively traded iron ore futures on the Dalian Commodity Exchange, for January delivery, soared as much as 9.9% in the morning session, the biggest percentage gain since Sept.30. They ended up 7.8% at 587 yuan ($91.96) per tonne.

Spot prices of iron ore with 62% iron content for delivery to China rose $4 to $95.5 a tonne on Monday, according to SteelHome consultancy.

Other steelmaking ingredients also increased. Dalian coking coal futures jumped 2.8% to 1,919 yuan a tonne at close and coke prices were up 1% to 2,881 yuan per tonne.

Construction steel rebar on the Shanghai Futures Exchange leaped 2.9% earlier during the session but stepped back and dipped 0.1% to 4,315 yuan a tonne when market closed.

Hot rolled coils, used in the manufacturing sector, inched 0.6% lower to 4,423 yuan per tonne.

Shanghai stainless steel futures rose 1.6% to 17,310 yuan a tonne.

($1 = 6.3831 Chinese yuan) REUTERS

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