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The price of iron ore rises on the back of a recovery in demand after China's military display

Iron ore futures prices rose on Tuesday, after hitting a low of one week in the previous session. This was aided by the hope that demand would recover after the conclusion of China's military parade.

As of 0149 GMT, the benchmark October iron ore traded on Singapore Exchange was trading at $102 per metric ton.

As of 2100 GMT, the most traded January iron ore contract at China's Dalian Commodity Exchange was unchanged at 770.5 Yuan ($107.72).

Analysts at Zijin Tianfeng Futures say that ore demand will likely rebound as the impact on hot metal production is only temporary. They are referring to China’s military parade to commemorate World War II's end on September 3.

In the short term, however, the price of the main steelmaking ingredient is likely to be impacted by the fall in hot metal production, which is a measure of iron ore consumption. This indicator, which measures the demand for the material, will decline by almost 2% this week, as opposed to a previous weekly decline of only 0.3%.

Iron ore consumption has been stable, supported by a high hot metal production, which is much higher than it was a year ago despite recent softening.

Coking coal, coke and other steelmaking components fell by 0.49% and 0.222% respectively.

The Shanghai Futures Exchange saw a decline in most steel benchmarks. Rebar fell 0.29%, while hot-rolled coils dropped 0.3% and wire rod fell 0.28%. Stainless steel rose 0.89%.

Jianhua Wang of consultancy Mysteel said that steel prices would continue to fall in September. She cited weak fundamentals as well as a persistent increase in inventories.

(source: Reuters)