MANILA: Dalian and Singapore iron ore futures were firmer on Monday, rebounding from oversold levels, although traders’ disappointment particularly over the demand for construction steel products in China capped gains.

Benchmark prices of the steelmaking ingredient slumped last week, hitting the lowest levels in more than five weeks on China’s Dalian Commodity Exchange and falling below $120 a tonne on the Singapore Exchange.

Along with the dismay over a fall in demand for construction steel products during what is normally a peak season, sentiment was also dampened by news that top steel producer China was considering cutting its annual crude steel output by about 2.5% this year in line with its policy to curb emissions.

Traders were also mindful of Chinese regulators’ frequent warnings against excessive market speculation and iron ore hoarding, as prices had rallied dramatically from October lows on expectations of strong demand from a recovering Chinese economy.

Such “a perfect storm of bearish factors” had dragged down prices, and iron ore “now looks and feels heavily oversold,” Navigate Commodities managing director Atilla Widnell said.

The most-traded May iron ore on the Dalian exchange was up 1.7% at 869.50 yuan ($126.34) a tonne, as of 0253 GMT, off a session-high 874.50 yuan.

On the Singapore Exchange, iron ore’s benchmark April contract edged up 0.3% to $120.05 a tonne. Technical support was seen at around the $117-$119 a tonne levels, Widnell said. Other Dalian steelmaking inputs were also slightly firmer, with coking coal and coke up 0.3% and 0.5%, respectively.

Rebar on the Shanghai Futures Exchange climbed 0.5% following an eight-session sell-off, while hot-rolled coil gained 0.2%, wire rod climbed 2.3%, and stainless steel added 0.5%.

Widnell said the Chinese Ministry of Industry and Information Technology’s prohibition of new steel capacity additions and enforcement of capacity replacement programmes should lend support to rebar prices.