China's iron ore futures rose on Wednesday on further policy support for an economy battered by the coronavirus pandemic, before closing well off the session's peak that was the highest in more than seven months.
Steel futures, however, succumbed to heavy sell-offs in global markets as investors panicked over the deepening public health crisis and its economic fallout.
The Dalian Commodity Exchange's most-traded iron ore contract, with May expiry, rose 4.1% to 692 yuan ($98.56) a tonne, the highest since Aug. 5, 2019, before closing up just 1.7%.
Iron ore futures on the Singapore Exchange were 1.2% higher in afternoon trade.
Prices of the steelmaking ingredient in the physical market were near three-week highs, partly underpinned by falling inventories at China's ports.
With all ports in China having returned to normal operations, according to the government, seaborne trade activities should improve further, said Helen Lau, a metals and mining analyst at Argonaut Securities in Hong Kong.
She said top steel producer China has also provided additional policy support to exporters, citing an increase in steel export tax rebates.
China will increase export tax rebates on almost 1,500 products from March 20, the finance ministry said on Tuesday, as the government looks to ease the pressure on companies hit hard by the virus outbreak.
"We take the view that increasing exports rebates will allow Chinese steel makers to churn out more steel products, likely in preparation for a possible demand recovery outside China under fiscal stimulus policies," Lau wrote in a note.
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