China iron ore futures surge on hopes of resuming steel production

BEIJING :China's benchmark iron ore futures surged on Tuesday, hitting their 10per cent 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 9.9per cent in the morning session, the biggest percentage gain since Sept.30. They ended up 7.8per cent at 587 yuan (US$91.96) per tonne.

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 2.8per cent to 1,919 yuan a tonne at close and coke prices were up 1per cent to 2,881 yuan per tonne.

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

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

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

(US$1 = 6.3831 Chinese yuan)

(Reporting by Min Zhang in Beijing and Enrico Dela Cruz in Manila; Editing by Rashmi Aich)