MANILA: Iron ore futures rose on Friday, with the Dalian benchmark contract rebounding from a seven-month low and set for a weekly gain, as falling steel inventories in China spurred hopes for some replenishment-driven demand.

In Singapore, the steelmaking ingredient climbed back above the $100 mark and was also on track for a weekly gain, supported after Brazilian miner Vale SA this week cut its 2022 iron ore production forecast.

The most-traded iron ore, for September delivery, on China’s Dalian Commodity Exchange ended morning trade 2.2% up at 672 yuan ($99.30) a tonne, on track for a weekly gain of around 1%. Thurday’s close at 657.50 yuan was its weakest since Dec. 29.

Iron ore’s front-month August contract on the Singapore Exchange rose 3% to $100.80 a tonne.

Inventories of rebar, wire rod, hot-rolled coil, cold-rolled coil and medium plate held by the 184 Chinese steel mills regularly surveyed Mysteel consultancy declined at the faster pace of 6.8% on week to a near six-month low of 5.7 million tonnes over July 14-20.

Steel products held by traders decreased for a fifth consecutive week to reach a 5-1/2-month low of 21.7 million tonnes as of July 21, lower by 818,600 tonnes or 3.6% on week, Mysteel reported.

“Iron ore demand is expected to improve to some extent,” analysts at Sinosteel Futures said in a note, citing Mysteel’s inventory report and Vale’s latest output guidance.

Other steelmaking ingredients also rebounded, after a two-day sell-off. Dalian coking coal rose 1.2% and coke gained 1.8%. But with the overall steel demand outlook in China, the world’s biggest steel producer, still clouded by COVID-19 lockdowns and troubles in the property sector, iron ore could remain under pressure in the medium term, analysts said.

Construction steel rebar on the Shanghai Futures Exchange rose 0.8%, while hot-rolled coil edged up 0.2%. Stainless steel slumped 2.2%.