China's benchmark iron ore futures surged on Tuesday, hitting their 10% daily trading limit in morning session, as steelmakers are set to resume production after rigorous controls in the past few months following government orders.
"The supply-side of iron ore has not changed much recently, but more mills are planning to increase output next month," a Beijing-based trader said.
Another Shandong-based iron ore trader said the market is trading on expectation of rising steel production in December.
China had successfully controlled its January-October crude steel production at lower levels than the same period in 2020 after a raft of strict curbs and sluggish downstream demand, leaving room for steel firms to raise output for the rest of the year on a monthly basis.
The most actively traded iron ore futures on the Dalian Commodity Exchange, for January delivery, soared as much as 9.9% in the morning session, the biggest percentage gain since Sept.30. They ended up 7.8% at 587 yuan ($91.96) per tonne.
Spot prices of iron ore with 62% iron content for delivery to China rose $4 to $95.5 a tonne on Monday, according to SteelHome consultancy.
Other steelmaking ingredients also increased. Dalian coking coal futures jumped 2.8% to 1,919 yuan a tonne at close and coke prices were up 1% to 2,881 yuan per tonne.
Construction steel rebar on the Shanghai Futures Exchange leaped 2.9% earlier during the session but stepped back and dipped 0.1% to 4,315 yuan a tonne when market closed.
Hot rolled coils, used in the manufacturing sector, inched 0.6% lower to 4,423 yuan per tonne.
Shanghai stainless steel futures rose 1.6% to 17,310 yuan a tonne.
($1 = 6.3831 Chinese yuan)
(Reporting by Min Zhang in Beijing and Enrico Dela Cruz in Manila; Editing by Rashmi Aich)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)