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The iron ore market is set to gain for a third consecutive week on the hope of China reforming its supply

Iron ore futures continued to rise on Friday and are headed for their third consecutive weekly gain. This is due to renewed hope that China's crackdown against a price war, will pave way for new reforms aimed at curbing steel overcapacity.

As of 0303 GMT, the most traded September iron ore contract at China's Dalian Commodity Exchange was trading 2.07% higher. It was 766 yuan (US$106.82) per metric ton.

As of 0253 GMT, the benchmark August iron ore traded on Singapore Exchange was $0.85 higher per ton.

Both benchmarks are up 4% this week.

Jiang Mengtian is a principal analyst with Horizon Insights. He said that the strength of the ferrous market stemmed primarily from the sentiment fuelled by the environmental protection-related restrictions on production in Tangshan, the main steel production hub, and the hopes for supply-side reform.

Jiang said that the steel market was the most affected, as shown by the rise in futures prices. He also noted the stockpiling of iron ore by downstream consumers.

Despite signs of a softening demand, ore prices continued to rise.

According to Mysteel, the average daily hot metal production, which is a measure of the iron ore demand, fell 0.6% from the previous week, reaching 2.39 million tonnes in the week ending July 10. This was the lowest level recorded since April 3.

Coking coal and coke, which are both steelmaking ingredients, also saw gains.

Jiang said that the price of coal had seen the biggest increase due to its low valuation.

The majority of steel benchmarks traded on the Shanghai Futures Exchange rose. The price of rebar increased by 1.32%. Hot-rolled coils rose by 1.39%, and wire rod was up 1.77%. Stainless steel fell by 0.47%. ($1 = 7.1707 Chinese Yuan Renminbi)

(source: Reuters)