Iron ore futures in China extended gains on Monday, rising for the fourth straight session, as higher weekly utilisation rate pointed to firm demand for the steelmaking ingredient.
Utilisation rate at 247 steel mills across China rose to 78.40% last week from 76.89% in the prior week, according to data compiled by consultancy Mysteel on China's main mills.
The most-traded iron ore futures contract on the Dalian Commodity Exchange for May 2020 delivery jumped as much as 1% to 670 yuan ($96.04) per tonne. It closed up 0.8% at 668 yuan. Benchmark spot cargoes of iron ore with 62% iron content for delivery to China jumped for a second session to $94.5 a tonne on Friday.
"Demand for iron ore has been good recently," a Shandong-based trader said. "But mills' restocking is coming to an end as the Chinese New Year holiday is imminent."
Prices for steel products could be relatively stable, while iron ore prices may still be affected by weather conditions and inventories, he added.
The most active construction steel rebar contract on the Shanghai Futures Exchange, for May 2020 delivery, retraced from two sessions of losses with a 0.2% gain at 3,559 yuan per tonne.
Hot-rolled coil, used in cars and home appliances, inched up 0.2% to 3,579 yuan per tonne.
Other steelmaking raw materials rose, with Dalian coking coal inched up 0.04% to 1,178 yuan per tonne and Dalian coke rose 0.7% to 1,883 yuan per tonne.
Shanghai stainless steel, for February 2020 delivery, drifted up 0.1% to 14,080 yuan per tonne.
China's central bank last week lowered the reserve requirement ratio (RRR) by 0.5 percentage points effective on Jan. 6, freeing up more than 800 billion yuan.
China's composite manufacturing and services PMI slowed to 52.6 in December from 53.2 in November, a private survey showed on Monday.
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