Dalian iron ore hits 2-week high

Iron ore futures in China climbed to their strongest level in nearly two weeks on Monday, tracking higher steel prices. Expectations that demand for steel raw materials will pick up after China's steel production is curtailed in the winter have also bolstered prices.

Hebei Province has cut 25.55 million tonnes of its steel capacity this year, ahead of its annual rate, the official Xinhua News Agency reported on Friday. To further curb pollution during the winter, which runs from November to March, Hebei will also limit steel and iron production by 50 percent in major manufacturing cities including Tangshan, Handang and Shijiazhuang, Xinhua reported.

These measures are in line with production restrictions in China for industrial enterprises, including steel producers, which is contributing to tightening supplies. The most traded rebar on the Shanghai Futures Exchange rose 3,750 yuan ($ 566) a tonne, the highest since October 26. It rose 1.7 percent to 3,742 yuan.

The efforts of steel contributed to higher prices for raw iron and coking coal. Iron ore on the Dalian Commodity Exchange last rose 3.6 percent to 457 yuan a tonne after it peaked at 458 yuan, the highest since October 25. Coking coal touched a two-week high of 1164 yuan.

With expectations that core demand will remain strong, this should exacerbate market demand when restrictions are in place.