Iron ore futures prices gained on Wednesday for a third straight session to hit their highest in two weeks, bolstered by optimism on a trade deal between the world’s two largest economies.

U.S. President Donald Trump, who heads to South Korea on Wednesday with high-stakes meetings expected with Chinese President Xi Jinping on Thursday, said that he expects to reduce U.S. tariffs on Chinese goods in exchange for Beijing’s commitment to curb exports of fentanyl precursor chemicals.

An easing U.S.-China trade tension has improved the broad risk sentiment, analysts at brokerage Xinhu Futures said in a note.

The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) closed daytime trade 1.96% higher at 804.5 yuan ($112.94) a metric ton, its highest since October 14.

The benchmark December iron ore (SZZFZ5) on the Singapore Exchange rose 1.42% to $107.25 a ton, the highest since October 14.

Also, the expectation of a flurry of restocking from steel mills in northern China to meet production needs after the conclusion of production curbs lent some support to prices of the key steelmaking ingredient.

Steelmakers in some northern regions, including the top steelmaking hub Tangshan city, were required to implement production controls from Monday following a forecast of worsening air quality.

Elsewhere, Brazilian miner Vale VALE3 said it remained very optimistic about the long-term iron ore demand.

Coking coal and coke (DCJcv1), other steelmaking ingredients, erased earlier loss to surge by 3.5% and 1.9%, respectively.

“The price rally was triggered by a re-emphasis on cracking down on the ‘involution-style’ competition by some authorities,” analysts at Galaxy Futures said.

China vowed in early July to curb excessive price wars, sparking hopes of a wave of supply-side reforms and sending coal prices soaring that month.

Most steel benchmarks on the Shanghai Futures Exchange gained ground. Rebar RBF1! added 1%, hot-rolled coil EHR1! advanced 1.21%, wire rod (SWRcv1) ticked up 0.48% and stainless steel HRC1! nudged up 0.31%.
Source: Reuters