Chinese iron ore prices surged nearly 5% to a three-week-peak on March 4, as market expected steel mills to replenish their stocks amid low inventory level.
Steel mills in the world's largest iron ore consuming country have been slowing raw material purchases after a steep run-up in prices in February.
Stocks of imported iron ore at Chinese ports continued to climb last week as of March 3, to 146.05 million tonnes, their highest level since late September, data showed.
''Although the restocking pace at steel mills may vary and no big range of purchase is expected, steel mills still need to bring in raw materials to support operation, which will back prices to go up,'' analysts pointed out.
Analysts also expect the rising steel prices amid increasing demand from downstream sectors to drive up raw materials.
The most-active iron ore contract for May delivery soared as much as 4.9% to 646.5 yuan/t ($96.47/t) when market opened on March 4.
It was up 2.2% to 630 yuan/t.
Steel prices also rose, buoyed by concerns over tight supply as several cities in northern China ordered steel mills to trim output, an effort to clear their smog-filled skies.
Top steelmaking city Tangshan on March 1 issued a level 1 smog alert, the highest in the country's four-tier pollution warning system, asking mills to curb output by 40-70% or even stop production from March 1-6.
Wu'an city, another major steelmaking hub in Hebei province, tightened its March anti-pollution rule, by asking steel mills to cut extra 10% of production on top of its original orders, at an aim to improve its air quality, according to a statement from the city government.
Benchmark construction rebar prices on the Shanghai Futures Exchange rose 0.9% to 3,810 yuan/t.
Hot-rolled coil futures edged up 0.3% to 3,801 yuan/t.
Source:sxcoal
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