Iron ore futures firmed on Tuesday, with both Dalian and Singapore benchmark contracts gaining more than $3 on expectations that steel usage in China would remain robust in the coming months and offset sluggish demand overseas.
The Dalian Commodity Exchange's most-traded iron ore for delivery in January 2021 closed the session 3.5% higher at 863 yuan ($124.51) a tonne, rising for a fourth session in a row.
Iron ore's front-month September contract on the Singapore Exchange climbed 3% to $120.42 a tonne in afternoon trade, extending gains into a third straight session.
"Market participants are looking forward to a strong second half for Chinese steel demand which should maintain steel and iron ore prices above previous expectations," said Justin Smirk, senior economist at Westpac Economic Research.
Supply disruptions caused by the COVID-19 pandemic will also provide support to the steelmaking ingredient's price, before it softens next year, he wrote in Westpac's monthly market outlook.
Physical iron ore also surged to more than $120 a tonne, with the inclusion of Yandi Fines and Karara Concentrate in the Dalian exchange's list of deliverable brands further boosting prices.
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