November 24, 2017 / 2:47 AM / 9 months ago

Iron ore eyes best week in months on stronger Chinese steel

* Spot iron ore at highest level since Sept. 20

* Steel output of CISA members higher in early November

* Coking coal futures set for biggest weekly gain in a year

By Manolo Serapio Jr

MANILA, Nov 24 (Reuters) - Iron ore prices are on course to post their biggest weekly increase in about five months as stronger Chinese steel prices spurred gains in the raw material, with coking coal also outperforming.

Chinese iron ore futures rose marginally to hit a nine-week high on Friday while spot iron ore prices also climbed to their strongest level since September on Thursday.

“With steel futures in China continuing to rise, physical iron ore traders appear to be happy to chase prices higher for the moment,” ANZ analysts said in a note.

The most-actively traded iron ore on the Dalian Commodity Exchange was up 0.3 percent at 507.50 yuan ($77) a tonne by 0230 GMT, after initially hitting 510 yuan, its strongest level since Sept. 19.

The contract has gained 9 percent so far this week, the most since end-June.

Iron ore for delivery to China’s Qingdao port .IO62-CNO=MB jumped 3.9 percent to $67.69 a tonne on Thursday, the highest since Sept. 20, according to Metal Bulletin.

The spot benchmark has risen 8.1 percent this week, its biggest such gain since early July.

Stronger profit margins have been encouraging Chinese mills to boost output, at a time when cities in the northern part of the country have imposed restrictions on sintering to cut pollution during winter.

Mills across northern China have been ordered to reduce sintering output from this month through March. Sintering is a process where iron ore is heated into a mass as a prelude to steelmaking and causes heavy pollution.

But data from the China Iron and Steel Association, as cited by ANZ, said member mills produced steel at an average rate of 1.8017 million tonnes in the first 10 days of November, up 0.7 percent from the last 11 days of October.

Some northern Chinese cities failed to improve air quality by much last month, the government said on Thursday as it warned provincial officials to comply with stringent steps to clear the skies.

Data last week showed only four of 28 northern Chinese cities met their air quality targets in October.

The most-traded rebar on the Shanghai Futures Exchange was off 0.8 percent at 3,798 yuan a tonne, but has risen almost 4 percent this week, the most since early August.

Coking coal steadied near a 10-week high at 1,315 yuan a tonne, gaining nearly 12 percent on the week, the biggest such increase in a year. ($1 = 6.5787 Chinese yuan) (Reporting by Manolo Serapio Jr.; editing by Richard Pullin)

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