China’s iron ore starts new year higher on strong demand, tight supplies

China’s iron ore futures rose on Monday, the first trading session of the New Year, supported by strong demand and ongoing supply constraints.

The most-traded May iron ore contract on the Dalian Commodity Exchange (DCE) gained 7.5 yuan, or 0.95%, to 797 yuan ($114.16) a metric ton.

Chinese markets resumed trading after the New Year holiday.

The benchmark February iron ore contract on the Singapore Exchange rose 0.29% to $105.65 a ton as of 07:04 GMT.

Chinese iron ore prices are being underpinned by steelmakers restocking ahead of the Lunar New Year holiday in February, while tight domestic supplies are also lending further support.

Several mines are limiting output due to environmental protection measures, according to a note from Shanghai Metals Market.

Inventories of the five major carbon steel products held by Chinese steel mills fell 1.1% week-on-week to 3.81 million tonnes during December 26–31, consultancy Mysteel reported.

Other steelmaking ingredients on the DCE fell, with coking coal and coke down 3.14% and 2.92%, respectively.

Steel benchmarks on the SHFE were mixed. Rebar declined 0.74%, hot-rolled coil traded down 0.79% and stainless steel lost 0.23%. Meanwhile, wire rod gained 4.93%.

($1 = 6.9813 yuan)

(By Ruth Chai; Editing by Mrigank Dhaniwala and Harikrishnan Nair)