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BEIJING: Dalian iron ore futures extended gains for the fourth day in a row on Thursday, supported by improved steel margins, production resuming and the persistent low inventory at Chinese steel mills.

A survey of 114 mills showed inventory of imported sintered ore fell for a third consecutive week, including a near 1% week-on-week decline to 24.19 million tonnes as of May 18, according to consultancy Mysteel.

That brings the total decline since late April to 7.6%, according to Reuters calculation based on Mysteel data.

A few mills in North China’s Shanxi province had restarted operations of blast furnaces that had been suspended earlier, consultancy Shanghai Metals Market (SMM) said in a report.

The blast furnace capacity utilization rate among surveyed mills climbed to 94.05% as of May 17, from 93.73% in the previous week, SMM data showed. The most-traded September iron ore on the Dalian Commodity Exchange (DCE) traded 2.18% higher at 748.5 yuan ($108.29) a tonne as of 0315 GMT, the highest since April 20.

“The destocking (of steel products) among steel mills has accelerated since May and the improved margins encouraged mills to build up positions for raw materials, lending support for prices,” analysts at Huatai Futures said in a note. However, the benchmark June iron ore on the Singapore Exchange was 1.01% lower at $107.05 a tonne as of 0333 GMT, after climbing to a more-than-three-week high of $108.14 on Wednesday. The price divergence between the Dalian and Singapore benchmarks is mainly due to the adjustment of valuation, two analysts said.

As for other steelmaking ingredients, coking coal advanced 1.92% and coke rose 1.08%. Rebar on the Shanghai Futures Exchange climbed 0.84% to a near two-week high of 3,707 yuan a tonne, hot-rolled coil increased by 0.67%, wire rod edged up 0.1% and stainless steel advanced 0.44%.

“Rebounding raw materials provided some cost support to steel prices,” Huatai analysts added.

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