3 Min Read
* Spot iron ore tops $90/T for first time since Aug 2014
* China producer price inflation hits near six-year high
* Baosteel lifts cold rolled coil prices for March (Adds Baosteel raising prices, updates futures prices)
By Manolo Serapio Jr
MANILA, Feb 14 (Reuters) - China's iron ore futures rose for a sixth session in a row on Tuesday, hitting their highest in more than three years, amid firm steel demand in the world's top consumer and tighter supply driven by Beijing's campaign against smog.
As futures rallied, spot iron ore prices have similarly surged, with the spot benchmark topping $90 a tonne for the first time since 2014 on Monday.
"China's positive steel outlook is driven by ongoing supply tightness and sustained demand growth," Argonaut Securities analyst Helen Lau said in a note.
Lau said some Chinese steel mills in Hebei, Beijing and Tianjin have received orders from local governments to suspend steel production from the second half of February to the first half of March.
The most-traded iron ore on the Dalian Commodity Exchange rose as far as 716 yuan ($104) a tonne, its strongest since October 2013. It closed up 1.7 percent at 712 yuan.
On the Shanghai Futures Exchange, rebar closed 1.3 percent higher at 3,442 yuan a tonne. It also marked the sixth straight day of increase for the construction steel product, which touched 3,450 yuan earlier, near Monday's two-month peak.
Amid a torrid rally in steel prices and other raw materials, China's producer price inflation picked up more than expected in January to near six-year highs, adding to views that global manufacturing activity is building momentum.
Besides regular environmental inspections conducted by Chinese authorities that have led to mills temporarily shutting their plants, the government plans to cut steel capacity by at least half in 28 cities across five regions during the winter heating season as Beijing intensifies its war on smog, a draft policy document shows.
Along with tighter supply, steel demand is also picking up after the Lunar New Year break and should strengthen during spring, traders say.
Baoshan Iron & Steel, China's biggest listed steelmaker, has raised cold rolled coil prices by 100 yuan ($14.57) per tonne for March delivery.
Bids for physical iron ore cargoes have risen as futures rallied.
Iron ore for delivery to China's Qingdao port .IO62-CNO=MB jumped 6.5 percent to $92.23 a tonne on Monday, the highest since August 2014, according to Metal Bulletin.
It was the biggest percentage spike for the spot benchmark since last December. ($1 = 6.8804 Chinese yuan) (Reporting by Manolo Serapio Jr.; Editing by Amrutha Gayathri)