By Manolo Serapio Jr
Data showing China's iron ore imports rose 13.5 percent from April to 94.14 million tonnes in May, underlining strong appetite from steel mills, helped pull iron ore prices off the day's lows.
China has sent teams of inspectors to six regions, including the steelmaking hubs of Hebei and Jiangsu provinces, to review environmental violations that were found during the checks last year. The latest inspections will last until end of June.
Those efforts could limit steel output, traders say, when Chinese demand remains strong.
The most-active rebar on the Shanghai Futures Exchange closed down 0.3 percent at 3,806 yuan ($594) a tonne, after hitting 3,869 yuan on Thursday, its loftiest since early December.
A sustained drop in steel stockpiles at Chinese traders pointed to firm consumption in the world's top consumer.
Stocks of construction-used rebar have fallen 46 percent from mid-March to 5.32 million tonnes on June 1, data tracked by SteelHome consultancy showed.
Inventories of hot rolled coil, used in manufacturing, have dropped 77 percent from early March to 2.01 million tonnes last week, according to SteelHome.
"Both long steel inventory and total steel inventory digestion rates are stronger than the same period of last year, which suggests that demand in the slow season is still strong," Morgan Stanley analysts said in a note.
Iron ore on the Dalian Commodity Exchange slid 1.2 percent to settle at 467 yuan a tonne, but above the day's trough of 463 yuan after Chinese import data.
The rise in imports last month reflected robust steel production in China as producers remained "very profitable," said Argonaut Securities analyst Helen Lau.
China's steel exports also rose, by 6.2 percent from April to 6.88 million tonnes last month, the highest since July 2017.
A recovery in global demand helped spur Chinese steel shipments, said CRU analyst Kevin Bai, despite a global tariff imposed by the United States.
"Exports will remain relatively stable but won't increase significantly mainly because of a better domestic steel market, thanks to the government's supply-side reform," said Bai.
Spot iron ore for delivery to China's Qingdao port rose 0.4 percent to $66.84 a tonne on Thursday, a three-week high, according to Metal Bulletin.
($1 = 6.4081 Chinese yuan)
(Reporting by Manolo Serapio Jr.; Editing by Gopakumar Warrier and Vyas Mohan)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)