Chinese futures rallied on the back of upbeat economic data and restocking traders in anticipation of strong demand for steel next year. This pushed up the prices of iron ore and other raw materials.
Growth in China's services sector rose to a 16-month high in November. Against the backdrop of solid performance in factories and the construction sector, China's economy is stabilizing at the end of the year. The inventory level reached a four-month low.
The most traded rebar on the Shanghai Futures Exchange rose 1.9 percent to 3,190 yuan a tonne. On the Dalian Commodity Exchange, iron ore futures rose 3.5 percent to 601 yuan a tonne. Winter tends to be a slow period for the Chinese steel market, but traders are gearing up for a surge in demand after a break for the Lunar New Year celebrations in January.
A robust appetite for high-quality iron ore also continues to support raw material prices as Chinese mills have improved the efficiency of using expensive coking coal, traders say.
Iron ore and steel contract prices rise in China
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