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Iron ore prices rise as Hebei mills resume production; however, auto weakness limits the upside.

Iron ore futures rose on Thursday as mills in China’s steelmaking hub, Hebei, ended?regulatory controls. However, weaker auto sales and a softer outlook for car exports may limit prices.

As of 0320 GMT, the most traded May iron ore contract at China's Dalian Commodity Exchange was trading 1.15% higher. It was 794 yuan (US$115.41) per metric ton.

The benchmark iron ore for April on the Singapore Exchange was up 0.67% at $104.85 per ton.

According to a report from Shanghai Metals Market, hot metal production decreased this week as several steel mills located in Hebei province - which surrounds Beijing - were subjected to safety and environmental inspections during important government meetings held in the capital.

Next week, iron?ore demand should increase as production recovers.

Mysteel, a consultancy, said that construction companies will?buy 5.64 million tonnes of steel in march, an increase of 17% from one month to the next.

The demand for steel typically increases in March, as construction begins again with warmer weather conditions and mills ramp-up production following Lunar New Year repairs.

Mysteel said that scrap steel production, which is usually melted in electric arc furnaces, and then further processed into steel, will also rebound in March following a dip in February.

The Iran war has also dampened the outlook of car exports.

China's automotive sector has been a significant consumer of steel over the past few years, which helps to offset'some weakness' in the country's struggling real estate market.

Coking coal and coke, which are used to make steel, also rose in price, by 3.19%?and 0.67% respectively.

The benchmarks for steel on the Shanghai Futures Exchange rose. Rebar grew by 0.48%. Hot-rolled coils grew 0.4%. Wire rod grew 0.36%. Stainless steel hardened 0.35%. ($1 = 6.8798 Yuan) (Reporting and editing by Sumana Niandy; Ruth Chai)

(source: Reuters)