BEIJING: China's iron ore futures on Wednesday recovered from a three-week low hit in the previous session, as demand from steel mills continued to pick up ahead of the peak spring construction season.
The most traded iron ore contract on the Dalian Commodity Exchange, for May delivery, was up 0.8 percent at 598 yuan ($89.42) a tonne as of 0215 GMT.
The contract had shed 3.2 percent on Tuesday and hit 586 yuan, its lowest since Feb. 1, on news that Brazilian exports of the steelmaking raw material were averaging higher year-on-year despite miner Vale's tailings dam accident last month. .
The spring period beginning in March, after China's Lunar New Year holiday, "is generally the peak season for steel products demand," said Zhao Xiaobo, an analyst with Sinosteel Futures in Beijing, adding that there should be a high concentration of construction sites starting work next month.
The most active construction steel rebar contract on the Shanghai Futures Exchange was on course for a fourth day of gains out of five, climbing 0.8 percent to 3,737 yuan a tonne, while hot-rolled steel coil was up 0.9 percent to 3,752 yuan a tonne.
Gains were nonetheless capped by high stock levels. Total iron ore inventories at Chinese ports <SH-TOT-IRONINV> currently stand at 145.05 million tonnes, according to SteelHome, the highest level since Sept. 21 last year.
"This may be due to some steel mills being forced to adhere to stricter sintering curbs in Tangshan," ANZ wrote in a note, referring to China's top steel-producing city in Hebei province.
Wednesday marks the first day that the Dalian exchange, whose iron ore futures trading volumes have been slumping in recent month, is allowing individual foreign investors to trade the contract.
"I do not think it would cause significant changes to price movement as the key players in the industry are already trading the Dalian iron ore futures since 2016," said Darren Toh, a data scientist with Singapore-based steel and iron ore data analytics company Tivlon Technologies.
Among other steelmaking raw materials, coking coal added 1.6 percent to 1,308.50 yuan a tonne, having touched a two-week high, while coke was up 0.6 percent at 2,139.50 yuan a tonne.
Physical coking coal markets remain "active, with Chinese traders keen to secure premium hard coking coal," pushing Australian prices higher, ANZ said.
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