Chinese iron ore futures rose to their highest in more than three weeks on Tuesday, adding to sharp gains from the previous session after being hammered for most of this year, but lingering worries over a supply glut kept a lid on gains.
China's iron ore and steel futures surged as much as 4 percent on Monday when investors covered short positions amid hopes that the markets may have found a bottom for now after heavy losses for most of 2014. Prices for both have dropped around 30 percent this year.
The most-traded iron ore for January delivery on the Dalian Commodity Exchange was up 1 percent at 587 yuan ($96) a tonne by midday after earlier hitting 591 yuan, its loftiest since Sept. 18.
Dalian iron ore rose by its 3.9 percent ceiling on Monday, rising in tandem with rebar steel futures in Shanghai.
That helped lift spot iron ore prices, with the benchmark 62-percent grade for immediate delivery to China .IO62-CNI=SI jumping 4 percent to $83.10 a tonne on Monday, its highest sinceSept. 17, according to data compiled by the Steel Index.Some traders were doubtful whether the gains would be sustained as spot cargoes remained plentiful.
"We're not very optimistic about the market so we don't think it will be sustained," said a Shanghai-based iron ore trader, adding there was modest buying interest for spot cargoes from Chinese steel mills.
"Further supportive Chinese data will be needed" to extend the rally in iron ore prices, analysts at Australia and New Zealand Banking Group said in a note.
Aiding investor sentiment on Monday was data showing that China's exports rose more than forecast in September and imports unexpectedly increased, calming fears of a slowdown in the world's No. 2 economy.
China's iron ore imports also rose in September to 84.69 million tonnes, the second highest monthly volume on record.
The most-active January rebar contract on the Shanghai Futures Exchange was off 0.1 percent at 2,640 yuan a tonne, after rising to 2,671 yuan earlier, its highest since Sept. 22.
Source: Reuters