Chinese iron ore futures shed early losses, and rallied more than 1 percent on Monday, as steel prices recovered after a three-day slide.
But plentiful stockpiles of the steelmaking raw material in China, which are at their highest since August, kept gains in iron ore prices curbed.
The most-traded iron ore contract for January delivery on the Dalian Commodity Exchange closed up 1.2 percent at 470 yuan ($71) a tonne.
On the Shanghai Futures Exchange, construction-used rebar rose 1.1 percent to end at 3,696 yuan per tonne, after falling as low as 3,627 yuan earlier in the session.
Demand for iron ore was likely to be cut as Chinese steel mills, mainly in the country’s north, curb production during winter in line with Beijing’s campaign against pollution, traders and analysts say.
Inventory of imported iron ore at China’s major ports reached 138.48 million tonnes as of Friday, the most since Aug. 4, according to data compiled by SteelHome consultancy.
China’s iron ore imports dropped nearly 23 percent in October from a record level the previous month as mills braced for the production cuts. But China’s own iron ore output last month rose 3.9 percent from a year ago.
Against weakening demand from steel mills, the increase in China’s iron ore production “will only lead to less import appetite, weighing down on seaborne prices,” Argonaut Securities analyst Helen Lau said in a note.
“We remain bearish on iron ore prices.”
Coal futures outperformed. Coking coal climbed 2.9 percent to 1,211 yuan per tonne, and coke rallied 4 percent to 1,906 yuan.