China's iron ore futures rose more than 6% on June 1, as strong domestic demand for the steelmaking ingredient and concerns over supply from key exporter Brazil lifted spot prices to their highest in 10 months.
The Dalian Commodity Exchange's most-traded September iron ore contract climbed as much as 6.4% to 775.50 yuan/t ($108.92/t) by 0408 GMT, extending its rally after a solid 20.1% gain last month, its biggest monthly rise since June last year.
Steel inventories in China have steadily fallen since mid-March, encouraging steelmakers to ramp up output that boosted demand for iron ore and supported prices of the raw material.
"Steel margins in China continue to trend higher, whilst there are concerns over Brazilian supply, amid the COVID-19 outbreak," said commodity strategists at ING in a note.
A strong appetite for iron ore in mills has brought stockpiles at the country's ports to 109.5 million tonnes, as of May 28, the lowest since November 2016.
The spot price for benchmark 62% iron ore bound for China surged to $102.5/t over the weekend, the highest since August 5.
Investors, meanwhile, have been on edge over iron ore supply from Brazil, which has recorded the second most coronavirus cases in the world after the United Sates.
(Writing by Emma Yang Editing by Jessie Jia)
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