BEIJING: China's iron ore futures continued to rise on Monday after recording their best weekly performance in six weeks, buoyed by expectations of a robust near-term demand at steel mills amid strong profitability.
The most-traded iron ore futures on the Dalian Commodity Exchange climbed as much as 2.9%, hitting an all-time high of 715.5 yuan ($103.54) a tonne. The contract closed up 2.3% at 711.5 yuan.
"Investors expect steel mills to accept even higher iron ore prices as mills are keen to ramp up more output to cash in on fat profit margins," said a Beijing-based trader.
Average margins on rebar-making is around 600 yuan a tonne, while they are 370 yuan on hot-rolled coil.
Inventory of imported iron ore at Chinese ports has fallen to 131.7 million tonnes as of Monday, its lowest level since mid-October in 2017, according to data compiled by SteelHome consultancy.
A weakened yuan, undermined by escalating trade tensions between the United States and China, also helped to support iron ore prices.
"We expect steel mills to replenish their iron ore stocks soon and it will drag port inventory to around 120 million tonnes in June," said analysts from Huatai Futures.
However, analysts also warn of weakening steel demand in summer season, which would crimp profitability at mills.
Benchmark Shanghai rebar prices picked up 0.2% to 3,780 yuan a tonne.
Hot-rolled coil futures fell 1% to 3,646 yuan.
Dalian coking coal contract edged up 0.4% to 1,387 yuan, while coke futures rose 0.9 percent to 2,172.5 yuan.
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