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BEIJING: Iron ore futures prices rebounded on Wednesday to their highest level in over six weeks, aided by renewed hopes of improved steel demand in top consumer China and expectations of lower supply after a major miner lowered its annual shipment outlook.

The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) ended morning trade 2.55% higher at 883.5 yuan ($121.94) a metric ton, its highest since March 8. It fell more than 1.5% on Tuesday.

The benchmark May iron ore on the Singapore Exchange climbed 4.54% to $117.9 a ton, as of 0332 GMT, the highest since March 7.

Iron ore fundamentals have improved and the valuation of the ferrous market is expected to rise, analysts at Galaxy Futures said in a note.

“The issuance of the special bonds is expected to speed up ahead, while the improvement in steel demand may sustain as construction steel consumption will continue to recover and the manufacturing sector-led steel demand will likely remain resilient.”

Iron ore futures weaken

Special bonds are typically used to fund infrastructure projects.

The state planner said on Tuesday that it would guide local governments to accelerate the progress of project construction and fund use, with analysts at Zijintianfeng Futures anticipating hot metal output to pick up further in the coming weeks.

Sentiment was also boosted after Australia’s Fortescue, the world’s fourth-largest iron ore supplier, on Wednesday logged a bigger-than-expected decline in third-quarter iron ore shipments, following a derailment of ore cars and weather disruptions that led to a slight cut in its outlook for annual shipments.

Other steelmaking ingredients on the DCE also gained, with coking coal and coke up 1.07% and 1.24%, respectively.

Steel benchmarks on the Shanghai Futures Exchange edged higher. Rebar ticked up 0.49%, hot-rolled coil added 0.5%, wire rod advanced 0.24% while stainless steel was little moved.

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