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The price of iron ore has risen for the past two months on hopes that China will stimulate steel production and reduce its supply.

Iron ore futures rose for the third consecutive session on Thursday. They reached multi-month highs as optimism grew over a new reform wave to curb steel production and additional stimulus measures by China, the world's largest consumer.

The daytime trading price of the most traded September iron ore contract at China's Dalian Commodity Exchange was 3.67% higher, closing at 763.5 Yuan ($106.39), a three-month record.

As of 0724 GMT, the benchmark August iron ore traded on the Singapore Exchange rose 3.41% to $99,35 per ton. This is the highest price since May 22.

The main reason for the rise in prices is the anticipation of a supply-side steel reform, according to a Shanghai analyst who spoke on condition of anonymity because he was not authorized to speak to media.

The head of China's state planner announced on Wednesday that China's GDP will surpass 140 trillion yuan in this year despite the ongoing trade war with the United States, and the persistent deflationary forces.

Analysts at Yongan Futures stated that this fueled some hopes about "whether there will be more stimulus at the high-level meetings later in the month."

Pei Hao is an analyst with international brokerage Freight Investor Services. She said that iron ore has benefited from the recent rally on the coal markets, which was driven by the expectation of supply-side changes.

The iron ore supply and demand did not change fundamentally. Although shipments fell, a decrease in arrivals is likely to be visible until late July.

Coking coal and coke, which are both steelmaking ingredients, also saw gains. They rose by 4.24% each and by 3.56% respectively.

The benchmarks for steel on the Shanghai Futures Exchange have strengthened. Rebar gained 1.89%; hot-rolled coil grew by 2.16%; wire rod climbed 1%, and stainless steel jumped 1.06%. ($1 = 7.1762 Chinese Yuan) (Reporting and editing by Amy Lv, Lewis Jackson and Mrigank Dahniwala).

(source: Reuters)