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Iron ore prices to rise on the back of a stronger steel outlook

Iron ore futures prices rose on Friday as they were expected to gain weekly, boosted by the expectation of higher steel prices and improved fundamentals.

As of 0301 GMT, the most-traded contract for January iron ore on China's Dalian Commodity Exchange was up 1.02% to 795 yuan (US$111.57) per metric tonne. If the current momentum continues, the contract will post weekly gains up to 1.4%.

The benchmark iron ore for October on the Singapore Exchange was up 0.51% to $105.45 per ton and is poised to gain 1.36% in a week.

According to the chief analyst of consultancy Mysteel, after declining steadily for the past two month, Chinese steel prices will rise in October due to improved market fundamentals, and the anticipated implementation by the central government of stronger economic stimuli policies.

Hexun Futures, a Chinese broker, says that despite stockpiling ore before the Golden Week holiday period, transportation restrictions prevent steel mills from keeping adequate inventories of raw materials, and could force them reduce production.

One of Russia's top steelmakers estimates that the demand for metals has dropped by as much as 15%.

Russia will be the fifth largest steel producer in the world by 2024, with a production of 71 million tonnes.

The average amount spent by Chinese tourists during the Golden Week holiday has fallen to its lowest level in three years, as the weak economy continues to affect the second largest economy of the world.

The U.S. Trade Policy, extreme weather conditions, intense competition on domestic markets and persistent weakness in property are all factors that contribute to the downturn.

Coking coal and coke, which are used to make steel, have both gained in price, rising by 1.26% and 1.50%, respectively.

The benchmark steel prices on the Shanghai Futures Exchange have mostly risen. The price of wire rod remained flat while the price of rebar, hot-rolled steel coil, and stainless gained 0.12%.

(source: Reuters)