MANILA: Iron ore prices in Asia rose on Monday, buoyed by strong demand for steel products in China and overseas, and as Chinese steel mills continued to ramp up output despite the government’s scrutiny of their compliance with stricter anti-pollution rules.

The most-traded September iron ore on China’s Dalian Commodity Exchange ended the morning trade 1.7% higher at 1,069 yuan ($163.83) a tonne, rising for a third consecutive session.

The steelmaking raw material’s front-month May contract on the Singapore Exchange climbed 1.4% to $174.65 a tonne by 0335 GMT, up for a fourth straight session. “Booming steel production continues to support the iron ore market,” analysts at ANZ said in a note.

Spot iron ore prices rose in China last week, with the benchmark 62% Fe grade at $176.50 a tonne on Friday, the highest since March 4, while the less-pollutive 65% Fe soared above $200, SteelHome consultancy data showed.

“Increased scrutiny on emissions is forcing steel mills to use higher-grade iron ore, which is well compensated by strong steel margins,” ANZ analysts said.

The robust steel demand in China, the world’s top producer and exporter of the construction and manufacturing material, is underpinned by rising home prices and increased excavator sales, they said.

That coincides with China’s rising steel exports as economic activity picked up elsewhere. Global steel demand will rise by 5.8% this year as economies recover from the COVID-19 pandemic, the World Steel Association said last week, though it painted a cautious outlook for 2022 as the impact of stimulus spending diminishes.

Construction steel rebar on the Shanghai Futures Exchange fell 1%, while hot-rolled coil slipped 0.3%. Still, Shanghai’s most-traded steel contracts are among this year’s top gainers in China’s ferrous metals complex.

Shanghai stainless steel advanced 0.3%. Dalian coking coal gained 0.3% while coke jumped 0.6%.