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Iron ore futures rose on Monday, with China’s benchmark contract extending a run of strong gains for a third session, buoyed by a positive demand outlook for the steelmaking ingredient in the world’s top steel producer.
However, trading in iron ore spot and futures thinned as China heads for a week-long Lunar New Year holiday from Thursday.
Iron ore’s most-traded May contract on China’s Dalian Commodity Exchange DCIOcv1 ended daytime trading 2.9% higher at 1,028 yuan ($159.21) a tonne, after earlier hitting 1,033 yuan, its strongest level since Jan. 28.
The most-active March iron ore on the Singapore Exchange SZZFK1 climbed 2.8% to $155.15 a tonne by 0727 GMT.
China’s appetite for iron ore remains strong despite seasonally-weak domestic demand for steel products, as imports likely rose sharply last month.
China’s January iron ore imports reached 108 million tonnes, a gain of 18 million tonnes over December and 9 million tonnes from a year earlier, according to market intelligence firm Kpler.
Refinitiv data shows monthly imports below 100 million tonnes, but higher versus December.
“The trend of import strength is likely to continue into 2021, and whilst not all underlying data is positive for iron ore demand, China’s manufacturing sector looks healthy,” Kpler said in a note.
While China’s factory activity grew at the slowest pace in five months in January, hit by a wave of domestic coronavirus infections, it remained in line with the ongoing recovery in the world’s second-largest economy. on the Shanghai Futures Exchange SRBcv1 rose 1.8% and hot-rolled coil SHHCcv1 jumped 2.8%, both up for a third straight session. Stainless steel SHSScv1 gained 0.7%.
Coking coal DJMcv1 added 0.6% and coke DCJcv1 climbed 1.6%.
Spot iron ore in China traded at $157 a tonne on Friday, dropping from $159.50 a week earlier but recovering from an eight-week low of $150 touched on Feb. 2, SteelHome data showed.