The most traded January iron ore on the Dalian Commodity Exchange rose as much as 2.1% to 721.50 yuan ($105.38) a tonne, its highest since August 17, before retreating to close down 0.2% at 705.50 yuan a tonne.
“Domestic mills in China don’t have much stock. Recently, their profit has come back. Production will rise much more as some big mills have not resumed production too quickly before,” a China-based trader said.
“August temperature is very high in China. September demand will be better,” the trader said.
China’s move to support its economy, including funding support for infrastructure projects, also boosted sentiment.
However, China continued to experience severely hot weather that dampened construction activity, while power curbs to preserve electricity in the country also hurt industrial enterprises.
($1 = 6.8468 yuan)
(With files from Reuters)