China's iron ore futures jumped 6% on Monday to a two-week high, logging a third straight session of gain, fuelled by robust short-term demand after Beijing vowed to provide more support for the country's economy. China's cabinet, the State Council, on Saturday pledged to beef up investment in infrastructure projects and regional development to support the economy.
The most-traded iron ore contract on the Dalian Commodity Exchange, for January 2020 delivery, repeatedly hit the daily upper-trading limit of 6% in the afternoon session and closed at 630 yuan ($88.82) a tonne.
However, iron ore prices are still expected to fall in the long run as they are at relatively high levels and supply is recovering, said Wu Shiping, analyst, Tianfeng Futures.
"The recent rebound in iron ore is a short-term pick-up, partly due to steel mills' temporarily increasing demand for raw materials," he said.
Steel and iron ore data analytics firm Tivlon Technologies said it expected steel demand to ramp up from the second week of September as China is entering into the peak season.
"Tivlon is observing voluntary production cuts from steel mills in China and steel inventories are easing from the highs," said the Singapore-based firm.
The most-active construction steel rebar contract on the Shanghai Futures Exchange closed up 2.7% at 3,407 yuan a tonne.
Benchmark 62% iron ore for delivery to China, as assessed by SteelHome consultancy, settled at $86 a tonne on Friday. The inventory of imported iron ore at Chinese ports soared to the highest level in three months at 125.25 million tonnes on September 2, data from SteelHome showed.
Hot-rolled coil, used in cars and home appliances, on the Shanghai Futures Exchange ended 2.3% firmer at 3,460 yuan a tonne.
Other steelmaking ingredients also edged up, with Dalian coking coal closing up 1.2% at 1,316 yuan a tonne, while coke gained 1.8% to 1,916 yuan. China's August factory activity unexpectedly rose to a five-month high in August, but export orders remained weak and business confidence faltered as the Sino-US trade war continued to escalate.