BEIJING: Benchmark iron ore futures in China jumped more than 5% on Monday, fuelled by rising demand as mills in steel hub Tangshan resumed production after the country's party centenary.

Steel output at some producers was restricted due to the Communist Party's 100th anniversary and environmental-related policies, sending down utilisation rates of blast furnaces at 247 mills across China to 81.01% as of July 2 from a week earlier, according to Mysteel consultancy.

"As Tangshan resumed production, short-term demand will return to pre-centenary level," analysts at SinoSteel Futures wrote in a note, adding that overall demand was still weakened by steel cut policies.

The most-traded iron ore futures on the Dalian Commodity Exchange, for September delivery, soared as much as 5.1% to 1,220 yuan ($188.76) per tonne, the highest level since June 11. They gained 5% as of 0330 GMT.

Spot prices of iron ore with 62% iron content for delivery to China dipped $0.5 to $217.5 a tonne on Friday, according to SteelHome consultancy.

Other steelmaking ingredients also gained. Dalian coking coal futures rose 3.0% to 1,969 yuan a tonne and coke futures increased 3.2% to 2,675 yuan per tonne.

Steel prices on the Shanghai Futures Exchange gained as well.

Construction rebar for October delivery rose 1.6% to 5,195 yuan per tonne. Hot rolled coils were up 1.4% at 5,484 yuan a tonne.

Steel supply is facing increasing pressure recently as some areas have stepped up output-cut plans while some mills are facing losses, analysts at Haitong Futures said in a note.

"However, current demand is obviously at off-peak season... (we) expect steel prices will remain range-bound fluctuations," they added.

Shanghai stainless steel futures for August delivery rose 1.6% to 16,725 yuan per tonne.