With increasing hopes for stronger demand in China, the world's largest consumer, in the coming weeks, iron ore futures prices extended their gains to a second consecutive session on Tuesday.
The September iron ore price on China's Dalian Commodity Exchange (DCE) rose by more than 3% on Monday. It finished daytime trading up 5.63% at 815.5 yuan ($112.73) per metric ton, its highest level since March 25.
After climbing more than 6% the previous day, the benchmark May iron ore on the Singapore Exchange was 3.54% higher at $107.95 a ton as of 0700 GMT, its highest level since March 26.
China's new policies, like managing crude steel production, have led to some improvement in overall economic expectations, according to analysts at Huatai Futures.
China's plans to control the output of crude steel this year were unveiled last Wednesday.
Huatai Futures suggests that although there are concerns about the high port side ore stocks and increased shipments, the improved steel margins could motivate steelmakers to restart production, leading to higher demand for ore.
Analysts believe that some steelmakers may raise production to boost cash flow before later having to cut output.
Tuesday's sentiment was further buoyed by the Chinese steelmakers' post-holiday frenzy of replenishment.
Statistics from consulting firm Mysteel show that iron ore transaction volumes at major ports rose to 1.63 million tons on Monday from 305,000 tons on the previous working day in China. Although margins improved somewhat, iron ore's clear cost advantage over steel scrap made it a more desirable feedstock for steelmaking.
