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SINGAPORE/BEIJING: Iron ore futures prices extended gains to a second straight session on Tuesday, underpinned by mounting hopes of improving demand for the key steelmaking ingredient in top consumer China in the coming weeks.

The most-traded September iron ore on China’s Dalian Commodity Exchange ended morning trade 4.6% higher at 807.5 yuan ($111.62) per metric ton, following a rise of more than 3% on Monday.

The benchmark May iron ore on the Singapore Exchange was 2.53% higher at $106.9 a ton at 0350 GMT, after rising over 6% in the previous session.

The overall macro expectation has somewhat improved after the announcement of policies on crude steel control and trading old home appliances for new ones in some regions, analysts at Huatai Futures said in a note.

China unveiled late last Wednesday its plans to continuously manage crude steel output this year.

Iron ore nears two-week high

“Steel margins have improved, which may encourage steelmakers to resume production later, thus generating more needs for ore,” Huatai Futures added, while citing high portside ore stocks and higher-than-usual shipments as the potential headwind.

Also, there are expectations that some steelmakers may ramp up production to generate more cash flow before being required to curb production later this year, analysts said.

The flurry of post-holiday restocking among Chinese steelmakers also lifted sentiment.

Transaction volumes of iron ore at major ports surged to 1.63 million tons on Monday from 305,000 tons on Sunday, a working day in China, data from consultancy Mysteel showed.

The obvious cost competitiveness of iron ore against steel scrap increased the appeal of the steelmaking feedstock as margins remained thin despite some improvement.

Other steelmaking ingredients on the DCE also posted gains, with coking coal and coke up 1.85% and 1.35%, respectively.

Steel benchmarks on the Shanghai Futures Exchange were mostly up.

Rebar strengthened 1.65%, hot-rolled coil rose 1.43%, wire rod increased 0.64%, and stainless steel gained 0.55%.

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