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BEIJING: Prices of Dalian iron ore futures extended gains into a third consecutive session on Wednesday, supported by growing expectations of a wave of production resumption among steelmakers in top consumer China.

The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) ended morning trade 1.41% higher at 825 yuan ($114.60) a metric ton.

Hot metal output, widely used to gauge ore demand, is expected to see some rise this week, analysts at Chaos Ternary Futures said in a note, adding that the mounting cost competitiveness of ore following a significant price drop will likely increase its appeal.

Analysts at ANZ said in a note “the recent fall in prices appears to have sparked some opportunistic buying”. Transaction volumes of iron ore at major Chinese ports surveyed climbed by 20% day-on-day to 1.27 million tons on Tuesday, data from consultancy Mysteel showed. The benchmark April iron ore on the Singapore Exchange was, however, 1.35% lower at $105.2 a ton, as of 0438 GMT, weighted down by lingering concerns about the timing and scale of ore demand recovery ahead as well as the remaining high level of portside ore stocks. Crude steel output in China is poised to slide in March from year-ago levels as mills delayed restarts or started maintenance after the February Lunar New Year holiday amid lacklustre demand, analysts said. Other steelmaking ingredients on the DCE advanced further, with coking coal and coke up 3.04% and 1.41%, respectively.

Most steel benchmarks on the Shanghai Futures Exchange ticked up. Rebar added 0.93%, hot-rolled coil gained 1%, wire rod climbed 0.41% while stainless steel shed 0.91%.

“Some traders with short positions have closed positions to lock in profits since last Friday; and the recent price rebound has contributed to the release of the pent-up demand from downstream sectors,” analysts at Everbright Futures said in a note.

“Also, more speculative buying is seen and market sentiment improved to some extent,” they added.

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