China's benchmark iron ore futures surged on Tuesday, hitting their 10% daily trading limit in morning session, as steelmakers are set to resume production after rigorous controls in the past few months following government orders.
"The supply-side of iron ore has not changed much recently, but more mills are planning to increase output next month," a Beijing-based trader said.
Another Shandong-based iron ore trader said the market is trading on expectation of rising steel production in December.
China had successfully controlled its January-October crude steel production at lower levels than the same period in 2020 after a raft of strict curbs and sluggish downstream demand, leaving room for steel firms to raise output for the rest of the year on a monthly basis.
The most actively traded iron ore futures on the Dalian Commodity Exchange , for January delivery, soared as much as 9.9% in the morning session, the biggest percentage gain since Sept.30. They ended up 7.8% at 587 yuan ($91.96) per tonne.
Spot prices of iron ore with 62% iron content for delivery to China rose $4 to $95.5 a tonne on Monday, according to SteelHome consultancy.
Other steelmaking ingredients also increased. Dalian coking coal futures jumped 2.8% to 1,919 yuan a tonne at close and coke prices were up 1% to 2,881 yuan per tonne.
