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Iron ore prices continue to rise despite falling shipments, but China data is mixed and may limit gains

Iron ore prices rose for the second session in a row on Wednesday. This was aided largely by a drop in shipments, and a resilient demand. However, mixed factory data from China, whose top consumer, curbed gains.

As of 0250 GMT, the most traded September iron ore contract at China's Dalian Commodity Exchange was trading 0.68% higher. It was worth 736.5 Yuan ($102.57).

As of 0240 GMT, the benchmark August iron ore traded on Singapore Exchange was up by 0.34% to $96.1 per ton.

Everbright Futures analysts said that iron ore shipments have dropped after the ramp-up at the end of last quarter.

Galaxy Futures analysts noted that the ore price will be supported by the supply side.

Galaxy's analysts said that despite a slight decline, hot metal production remained at a high level. Steel consumption in the manufacturing sector is also strong.

Iron ore demand is usually gauged by the hot metal production.

The gains, however, were modest. Data showed that China's consumer price index rose in June for the first five months. Meanwhile, its producer deflation reached its highest level in nearly two years.

In the second largest economy in the world, uncertainty about a trade war around the globe and a subdued domestic demand are still causing policymakers to be under pressure to introduce more support measures.

Coking coal and coke, which are used to make steel, have gained 1.55% and 1.06 % respectively.

The benchmarks for steel on the Shanghai Futures Exchange have been moving in a narrow range. The price of rebar was 0.07% higher. Hot-rolled coil, stainless steel and wire rod were all flat. ($1 = 7,1802 Chinese Yuan) (Reporting and editing by Harikrishnan Nair; Amy Lv, Lewis Jackson)

(source: Reuters)