Iron ore jumps on strong demand

Iron ore futures rose about 2% to above CNY 805 per tonne on Tuesday, reaching a near seven-week high on expectations of stronger demand from top consumer China.

Prices were supported by the restart of steel production in major furnace hubs after output curbs tied to China’s military parade were lifted, measures originally imposed to reduce pollution and ensure clear skies.

Additional support came from improving margins for steelmakers after Beijing pledged to cut capacity in the sector to ease deflationary pressures on manufacturers, prompting ore suppliers to raise offer prices.

At the same time, China’s iron ore imports climbed above 105 million tonnes in August, up 1.3% from the prior month.

However, the broader demand outlook remained subdued as monetary indicators pointed to weakness and the official construction PMI signaled the sector’s first contraction since January.