Iron ore prices continued to rise as China's huge supply of the steel industry's key raw material continues to dwindle, an early sign that a period of severe oversupply is beginning to ease.
Inventories at Chinese ports have now fallen over the past four weeks, according to data released Friday evening, after rising to more than 150 million tons in late July. The pullback offered a glimmer of hope for bulls, although iron ore is still down nearly 30% this year.
However, the broader outlook for China's steel sector remains highly uncertain due to the beleaguered real estate sector and the government's shift to new growth sectors. Traders are watching whether steel production will pick up again after recent slumps, as July and August are typically the weakest season for steel production.
Iron ore futures rose 4.2% to $100.20 per ton in Singapore as of 15:48 local time. This comes after a 4.5% rise last week.
Blast furnace output "has recently shown signs of decline," but iron ore inventories remain relatively high, Huatai Futures Co said in a note. Base metals also rose on Monday on the Shanghai Futures Exchange, with aluminum hitting its highest level since mid-July. The London Metal Exchange was closed due to a public holiday in the UK.
