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Chinese iron ore futures rally as steel mills restock

Chinese iron ore futures rally as steel mills restockSHANGHAI: Chinese iron ore futures climbed more than 3 percent to hit a one-week high on Tuesday as buying from steel mills in the world’s top consumer picked up and inventories at ports dropped.

The most active January iron ore futures contract on the Dalian Commodity Exchange jumped for the second straight day to a session high of 366.5 yuan ($ 59.02) a tonne, the highest since July 21. It was 1.8 percent higher at 359.5 yuan at close.

Spot steel prices rebounded as Chinese steel mills were widely expected to slash output as a result of tougher environmental measures, although some mills have slowed the pace of output cuts, hoping to profit from any rally in the market.

“Steel mills’ running rates are still low compared with May and June, but they haven’t slashed output by a great deal as widely expected, lured by the recent gains in spot prices, so they are restocking iron ore,” said Xia Junyan, an analyst with Everbright Futures in Shanghai.

Iron ore inventories at 42 big Chinese ports dropped 1 percent to 81.31 million tonnes on Tuesday from last Friday, data from industry consultancy Umetal.com showed.

Iron ore for immediate delivery to China’s Tianjin port <.IO62-CNI=SI> rose 1.4 percent to $ 51.4 a tonne on Monday, according to the Steel Index.

The most active rebar contract on the Shanghai Futures Exchange dipped 0.2 percent to close at 2,072 yuan after rising for two consecutive days.

Copyright Reuters, 2015

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