Iron ore futures edged higher on Wednesday but were stuck in a narrow trading range, as restocking demand propelled spot prices in China to the highest in more than a week despite renewed steel production controls in Tangshan city.
The most-traded iron ore for May delivery on China's Dalian Commodity Exchange rose 0.5% to 683 yuan ($107.19) a tonne, after earlier hitting 696.50 yuan, its strongest since Dec. 27.
The steelmaking ingredient's most-active February contract on the Singapore Exchange was virtually flat at $122.30 a tonne.
The spot price of benchmark 62%-grade iron ore from Australia rose to $123.50 a tonne on Tuesday, the highest since Dec. 27, according to SteelHome consultancy data.
Rebar on the Shanghai Futures Exchange rose 1.7%, while hot-rolled coil climbed 2.1%. Stainless steel gained 0.6%.
Iron ore futures end 2021 with 12pc drop
Spot rebar prices jumped to the highest in the more than two weeks on Tuesday as end-users took some tonnage for their replenishment needs after the holidays, Mysteel consultancy reported.
Dalian coking coal added 1% and coke jumped 3.6%.
Traders said restocking demand for iron ore overshadowed a pollution warning in the steel hub Tangshan city in Hebei province, which requires steel mills to curb operations.
Top steel producer China is expected to keep steel production restrictions in place to ensure smog-free skies as it hosts the 2022 Winter Olympic Games in February, with some events to take place in Hebei.
Despite a positive start to 2022, the overall outlook for iron ore and steel demand in China remains downbeat.
"We expect more restrictive policy in property (sector) will depress steel demand, with quotas for emissions intensive industries, specifically steel," J.P. Morgan analysts said in a note.
"We predict 2022 will be a watershed year, with seaborne iron ore supply growing but China iron ore demand contracting," they said.
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