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Dalian and Singapore iron ore futures rose on Tuesday, as warmer weather raised expectations for a pickup in steel demand and the market focused on improving consumption fundamentals.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) DCIOcv1 ended daytime trading 1.34% higher at 909.5 yuan ($131.09)a tonne, after a 2.13% fall on Monday.
On the Singapore Exchange, the benchmark April iron ore SZZFJ3 was at $126.7 a tonne as of 0700 GMT, up 1.93%.
“The rise in (iron ore) prices is primarily driven by expectation of continuously recovering downstream (steel) demand,” said Pei Hao, a Shanghai-based senior analyst from FIS, an international brokerage firm.
The market had been under pressure on concerns that authorities could take action to curb rising prices following a government meeting on Friday.
“Now, it seems that the fundamental factors have begun to play a dominant role again,” Pei said.
The average concrete capacity utilisation rate and construction steel products transaction volumes have increased recently, indicating a recovery in the downstream steel consumption sectors, Everbright Futures said in a note.
China likely produced about 2.69 million tonnes of crude steel per day from Feb. 21 to 28, a rise of 5.16% from the previous 10-day period, the China Iron and Steel Association (CISA) said on its official website on Monday.
Other steel-making raw materials, coking coal and coke, shrugged off mild gains achieved in the morning session.
Coking coal DJMcv1 futures fell 0.65% and coke futures DCJcv1 dipped by 0.38%, although some domestic coking plants raised their spot coke offer prices by 100 yuan a tonne from Tuesday, consultancy Mysteel said in a report.
Rebar on the Shanghai Futures Exchange SRBcv1 climbed 0.83% to 4,248 yuan a tonne, hot-rolled coil SHHCcv1 gained 0.37% and wire rod SWRcv1 rose 0.43%. Stainless steel SHSScv1 fell 0.92%.