MANILA: Benchmark iron ore futures in China climbed to the week's highest in early trade on Thursday as steel mills continued to buy raw materials, but the uncertain outlook for the country's steel demand capped further gains.
Steel prices were lower, with the benchmark construction steel rebar contract retreating after two days of gains.
The May 2019 iron ore contract, the most active on the Dalian Commodity Exchange, rose as much as 2.2 percent to 623.5 yuan ($93.00) a tonne.
"Steel mills in China have started ramping up their sintering utilization," said Darren Toh, a data scientist with Singapore-based steel and iron ore data analytics company Tivlon Technologies.
"Our data analytics model is suggesting that iron ore prices are starting to firm from the second half of March onwards," he said, adding that Tivlon is maintaining its $120 a tonne target price by August this year.
Coking coal was up as much as 0.6 percent at 1,242 yuan a tonne, while coke edged up 0.8 percent to 2,016.5 yuan.
Some of the macroeconomic data in China is "quite supportive of the commodities market", said metals and mining analyst Helen Lau of Argonaut Securities.
"If you look at the property investment, it's accelerating. The fixed asset investment is stronger also and the number is in line with some market expectations, reflecting government support," she said.
Data on Thursday showed growth in China's industrial output fell to a 17-year low in the first two months of the year, pointing to further weakness in the world's second-biggest economy.
However, fixed-asset investment growth quickened to 6.1 percent in the first two months of this year, as the government fast-tracked more road and rail projects.
Lau said more data is needed "to feel the pulse of the economy".
"We do not have enough data that will give a clue (on the economy's direction), that will guide the outlook," she said. "(Prices are) mainly driven by news flows, such as developments in the (U.S.-China) trade talks."
The most-active rebar contract on the Shanghai Futures Exchange dropped as much as 1.4 percent to 3,762 yuan a tonne. Hot rolled coil dropped 1.5 percent to 3,703 yuan.
China's steel output rose 9.2 percent to 149.58 million tonnes in January-February from a year earlier, as mills in the world's top producer ramped up production amid easier environmental restrictions.
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