Iron ore futures rose on Friday and were headed for a third weekly gains, underpinned by renewed hopes that top consumer China’s crackdown on a price war will pave the way for another round of reforms to curb steel overcapacity.

The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) TIO1! closed daytime trade 1.8% higher at 764 yuan ($106.56) a metric ton.

The benchmark August iron ore (SZZFQ5) on the Singapore Exchange was 0.14% higher at $99.15 a ton as of 0722 GMT.

Both benchmarks have risen over 3.5% so far this week.

Sentiment in the ferrous market was mainly fuelled by environmental protection-related production restrictions in major steel production hub Tangshan and hopes of supply-side reforms, said Jiang Mengtian, principal analyst at consultancy Horizon Insights.

“The steel market benefited the most as reflected in the futures prices and a wave of stockpiling from downstream consumers, which helped lift iron ore prices,” said Jiang.

The rise in ore prices comes despite softer demand.

The average daily hot metal output, a gauge of iron ore’s demand, slid 0.6% week-on-week to 2.39 million tons in the week to July 10, the lowest level since April 3, data from consultancy Mysteel showed.

Other steelmaking ingredients on the DCE recorded gains, with coking coal NYMEX:ACT1! and coke (DCJcv1) rising 3.34% and 2.81%, respectively.

Coking coal prices have gained nearly 7% so far this week after President Xi Jinping visited Shanxi, China’s top coal production hub.

China’s top leaders pledged last week to step up regulation on aggressive price cuts by Chinese companies, which later raised speculation about potential supply reforms in several sectors plagued by overcapacity.

“Coking coal prices saw the most significant rebound due to low valuations previously,” Jiang added.

Most steel benchmarks on the Shanghai Futures Exchange firmed. Rebar RBF1! rose 1.1%, hot-rolled coil EHR1! and wire rod (SWRcv1) advanced 1.2%, while stainless steel HRC1! lost 0.82%.
Source: Reuters