BEIJING,
March 1 (Reuters) - Iron
ore futures jumped on Wednesday, as better-than-expected China manufacturing
activity data raised prospects of a pickup in demand from the world's top steel
producer.
The most-traded May iron ore futures contract on the Dalian
Commodity Exchange (DCE) DCIOcv1 was 1.97% higher at 904.5 yuan ($130.62) a
tonne, as of 0215 GMT, after closing about 0.8% lower in the previous session.
On the Singapore Exchange, the benchmark March iron ore SZZFH3 was
up 1.18% at $125.55 a tonne, extending gains.
China's
manufacturing purchasing managers' index (PMI)climbed
to 52.6 last month, the highest reading since April 2012, up from 50.1 in the
previous month.
"We believe the better-than-expected data has injected some confidence
into the market. Also, the expectation of continued improvement in downstream
(steel) demand lent support to the prices of raw materials including iron
ore," said Yu Chen, a Shanghai-based senior iron ore analyst at
consultancy Mysteel.
Chinese steel mills are expected to replenish iron ore inventories
to meet production needs after some mills resumed production, analysts from
Huatai Futures said in a note, adding that the hot metal output had improved
steadily.
Coking coal and coke, also steelmaking ingredients, showed signs
of strength. Coking coal DJMcv1 rose 0.59%, while coke DCJcv1 grew
1.93%.
Along with improved demand from downstream steel consumption
sectors, strong raw material prices also lent support to the steel market.
Rebar on the Shanghai Futures Exchange SRBcv1 rose
1.18%, hot-rolled coil SHHCcv1 climbed by 1.1% and wire rod SWRcv1 moved
up 0.98%. Stainless steel SHSScv1 fell 1.06%, though.
"Demand (for stainless steel) is typically lacklustre in
the first quarter (of a year). Moreover, the comparatively high stocks in Wuxi
and Foshan warehouses also weighed on prices," said Ellie Wang, a
Shanghai-based senior nickel analyst from consultancy CRU Group.