Iron ore futures rose on Tuesday, with Singapore prices rebounding after two straight sessions of losses, as top steel producer China resumed ramping up output to cash in on increased construction activity during the September-October peak season.
Benchmark October iron ore on the Singapore Exchange climbed 1.5% to a session high of $97.05 a tonne, while the September contract rose 0.2% to $98.60.
On China’s Dalian Commodity Exchange, the most-active January iron ore contract DCIOcv1 ended daytime trade 1.1% higher at 718.50 yuan ($100.36) a tonne.
Rebar output among the 137 Chinese steel producers covered in a weekly survey by industry information provider and consultant Mysteel rose 26,700 tonnes, or 0.9%, for Sept. 15-21 to about 3.1 million tonnes from the previous week.
Steel mills are also replenishing their iron ore stocks, ahead of China’s week-long National Day holiday from Oct. 1.
Tuesday’s market gains indicated that the market has not given up hopes that the recovery in Chinese steel production and demand would be sustained throughout September and October.
“Data from CISA showed average daily output of crude steel from major steel mills increased 2.23% in mid-September versus early September, as the industry geared up for peak construction,” Westpac analysts said in a note, referring to industry group China Iron & Steel Association.
Rebar on the Shanghai Futures Exchange SRBcv1 rose as much as 2.5% to hit its highest since Aug. 29 at 3,845 yuan a tonne.
Hot-rolled coil SHHCcv1 advanced 2.3%, while stainless steel SHSScv1 gained 0.3%.
Other steelmaking inputs also climbed, with Dalian coking coal DJMcv1 and coke DCJcv1 up 2.9% and 2.7%, respectively.
Traders shrugged off data showing profits at China’s industrial firms shrank at a faster pace in January-August amid strict COVID-19 restrictions and a deepening property slump.