MANILA: Iron ore prices rose on Wednesday, underpinned by expectations of resilient near-term steel demand in China, although gains were capped amid concerns about a slowdown in the world’s second largest economy and likely steel output controls.

The benchmark October iron ore on the Singapore Exchange was up 0.7% at $115.75 per metric ton, as of 0700 GMT. It hit a five-month peak of $117.25 on Tuesday, buoyed by China’s policy measures to revive its faltering growth and struggling property sector.

The steelmaking ingredient’s most-traded January contract on China’s Dalian Commodity Exchange ended daytime trade 0.1% higher at 853.50 yuan ($116.80) per ton.

“Current demand for iron ore remains high, and overall macro expectations are relatively optimistic,” Sinosteel Futures analysts said in a note.

Spot prices of iron ore bound for China have also risen further this week, with the benchmark 62%-grade material climbing to $119 per ton on Tuesday, the highest since mid-April, SteelHome consultancy data showed.

“Steel demand is expected to trend up in September, based on seasonal demand recovery,” industry consultancy and data provider Mysteel said in its weekly outlook.

The outlook for iron ore demand beyond the traditional September-October peak season, however, is clouded by likely steel production cuts in China as the country seeks to curb the industry’s carbon emissions for a third straight year.

Some steel mills may opt to cut output in the short term due to losses stemming from high raw material costs, while the focus in the long run is on the implementation of administrative production controls, Sinosteel analysts said.

Steel benchmarks in Shanghai were subdued. Rebar was flat, hot-rolled coil dipped 0.4%, while wire rod edged up 0.1%. Stainless steel gained 0.3%. Coking coal on the Dalian exchange climbed 0.9%, while coke dipped 0.2%.