China iron ore futures hit upper limit on hopes of resuming steel production

BEIJING : China's benchmark iron ore futures surged nearly 10per cent in early trade on Tuesday to hit their daily upper limit, 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 9.9per cent in the morning session, the biggest percentage gain since Sept.30. They surged 9.1per cent to 594 yuan (US$93.02) a tonne as of 0306 GMT.

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

Other steelmaking ingredients also increased. Dalian coking coal futures jumped 3.1per cent to 1,925 yuan a tonne and coke prices were up 1.4per cent to 2,894 yuan per tonne.

Construction steel rebar on the Shanghai Futures Exchange leaped 1.6per cent to 4,390 yuan a tonne, extending gains into the third straight session.

Hot rolled coils, used in the manufacturing sector, inched 0.5per cent higher to 4,470 yuan per tonne.

Shanghai stainless steel futures rose 1.2per cent to 17,525 yuan a tonne.