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China iron ore rises for third day on strong restocking demand
Tuesday August 01, 2017 12:11 AM
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* Steel mills expand output after summer maintenance
* Steel rebar hits highest since September 2013
* BMI expects robust Chinese metal demand in 2017
BEIJING, Aug 1 (Reuters) - China's iron ore futures extended gains into a third session on Tuesday after surging nearly 8 percent to hit their trade limit-up the day before, boosted as steel mills stock up on the raw material.
Steel producers have gradually been picking up output after conducting maintenance on some equipment over the summer. The weekly operation rate at mill furnaces had climbed 0.56 percentage point to 77.49 percent by Friday from the week before, data from Mysteel consultants showed.
"The market holds strong expectations for higher raw materials prices due to big margins and resuming operations at mills," analysts at Orient Futures said in a note.
The most-active iron ore futures on the Dalian Commodity Exchange had climbed 3.4 percent to 574 yuan ($85.43) a tonne by 0414 GMT on Tuesday.
Prices have also been bolstered by data on Monday that showed activity in China's steel industry continued to expand in July, with the Purchasing Managers' Index (PMI) rising to 54.9 from 54.1 in June. Iron ore for delivery to China's Qingdao port had risen 5 percent to $73.70 a tonne by Monday's close.
Stockpiles of imported iron ore at Chinese ports remain at high levels, standing at 140.45 million tonnes by Monday, around the same as the previous week, just below a record of 141.45 million tonnes, according to data compiled by SteelHome.
BMI research expects demand for industrial metals in China to pick up in 2017, supported by a firm economy.
"But (demands) will slow by 2018 as the long-term infrastructure and construction projects initiated in H2 2016-Q1 2017 will start being completed and the cooling of fiscal support to heavy industries will cap new demand," it said.
The most-traded steel rebar futures on the Shanghai Futures Exchange rose 1.3 percent to 3,710 yuan a tonne on Monday, after hitting an intraday-peak at 3,759 yuan a tonne, the highest since September 2013.
Inventories of rebar have been piling up since mid-July, rising 7.41 million tonnes to 380.11 million tonnes last week.
Spot prices rose 1.07 percent to 3,988.92 yuan a tonne on Monday, data from the Mysteel website showed.
($1 = 6.7188 Chinese yuan renminbi)
(Reporting by Muyu Xu and Beijing Newsroom; Editing by Joseph Radford)