Iron ore price rebounded from 18-month lows on bets that stronger-than-expected steel production cuts so far this year mean Chinese steelmakers are ready to increase their volumes next month.
The most actively traded iron ore futures for January delivery on the Dalian Commodity Exchange rose 9.9% in the morning session, the biggest percentage gain since Sept. 30. Iron ore rose 7.8% to 587 yuan ($91.96) per tonne.
"The supply side of iron ore hasn't changed much recently, but more mills plan to increase production next month," a Beijing-based trader said. said.
Another Shandong-based iron ore trader said the steel market traded positively in December, with expectations for increased steel production.
After a series of stringent restrictions and downward demand, China successfully kept crude steel production from January to October at lower levels than in the same period in 2020, leaving room for steel companies to increase production on a monthly basis for the remainder of the year.
Significant demand for five core steel products, including rebar, wire rod and hot rolled coil, rose for two weeks in a row, increasing 4.2 percent from last week to early November, according to data from Mysteel consulting.
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