Iron ore futures prices climbed on Monday to their highest in nearly two weeks, as optimism over easing trade tensions between China and the United States, the world’s two largest economies, outweighed demand concerns in top consumer China.

Top Chinese and U.S. economic officials on Sunday hashed out the framework of a trade deal for U.S. President Donald Trump and Chinese President Xi Jinping to decide on later this week.

Trump said U.S. and China are set to “come away with” a trade deal.

The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) TIO1! closed daytime trade 1.94% higher at 786.5 yuan ($110.42) a metric ton, its highest since October 15.

By 0702 GMT, the benchmark November iron ore (SZZFX5) on the Singapore Exchange jumped 1.3% to $105.55 a ton, the highest since October 15.

A wave of production curbs in northern China regions, including top production hub of Tangshan city, raised concerns about demand for the key steelmaking ingredient, limiting further price upside potential.

Tangshan city will launch a level-2 emergency response from Monday amid a forecast of worsening air pollution, it said on its WeChat account late on Sunday.

Local steel mills are required to curb production during such emergency actions.

Also casting a shadow on the demand outlook was Beijing’s proposal for a more stringent steel capacity swap plan to reduce existing capacity and rebalance supply and demand, 14 months after it paused the old programme.

Coking coal and coke, other steelmaking ingredients, climbed 0.96% and 0.79%, respectively.

Most steel benchmarks on the Shanghai Futures Exchange benefited from the anticipation of reduced supply due to production restrictions in the northern region.

Rebar RBF1! rose 1.54%, hot-rolled coil advanced 1.45%, stainless steel HRC1! nudged up 0.08% while wire rod (SWRcv1) dipped 0.27%.
Source: Reuters