Iron ore prices in China on Friday posted their biggest weekly increase in nearly five months as stronger steel prices spurred gains in the raw material, with coking coal marking their best week in a year.
Chinese iron ore futures touched a 10-week high on the last trading day of the week, providing further support to spot iron ore prices, which hit their strongest since September on Thursday.
“With steel futures in China continuing to rise, physical iron ore traders appear to be happy to chase prices higher for the moment,” ANZ analysts said in a note.
The most-actively traded iron ore on the Dalian Commodity Exchange closed up 1.5 percent at 513.50 yuan ($78) a tonne, after hitting 515.50 yuan intraday, its strongest level since Sept. 14.
The contract gained 9.4 percent this week, the most since end-June.
Iron ore for delivery to China’s Qingdao port .IO62-CNO=MB jumped 3.9 percent to $67.69 a tonne on Thursday, the highest since Sept. 20, according to Metal Bulletin.
The spot benchmark has risen 8.1 percent so far this week, its biggest such gain since early July.
Stronger profit margins have been encouraging Chinese mills to boost output, at a time when cities in the northern part of the country have imposed restrictions on sintering to cut pollution during winter.
Mills across northern China have been ordered to reduce sintering output from this month through March. Sintering is a process where iron ore is heated into a mass as a prelude to steelmaking and causes heavy pollution.
But data from the China Iron and Steel Association, as cited by ANZ, said member mills produced steel at an average rate of 1.8017 million tonnes in the first 10 days of November, up 0.7 percent from the last 11 days of October.
Some northern Chinese cities failed to improve air quality by much last month, the government said on Thursday as it warned provincial officials to comply with stringent steps to clear the skies.
Data last week showed only four of 28 northern Chinese cities met their air quality targets in October.
The most-traded rebar on the Shanghai Futures Exchange was off 0.4 percent at 3,814 yuan a tonne, but increased 4 percent this week, the most since early August.
Coking coal rose nearly 3 percent to a 10-week high of 1,343 yuan a tonne, and gained 12 percent on the week, the biggest such increase in a year.
Source: Reuters & Hellenic Shipping News