Chinese iron ore futures climbed to their strongest level in almost two weeks on Monday, tracking firmer steel prices after China's top steel producing province surpassed its capacity reduction targets for the year.
Expectations that demand for the steelmaking raw material would pick up after China's steel production curbs over winter also underpinned prices.
North China's Hebei Province has slashed 25.55 million tons of its steelmaking capacity so far this year, ahead of its annual target, the official Xinhua News Agency reported on Friday.
To further curb pollution during winter, which lasts from November through March, Hebei will also limit steel and iron output by 50 percent in major producing cities including Tangshan, Handan and Shi?jiazhuang, Xinhua reported.
The measures are in line with China's output restrictions for industrial plants including steelmakers, helping tighten supply. The most-traded rebar on the Shanghai Futures Exchange rose as far as 3,750 yuan ($566) a ton, its loftiest since October 26. It was up 2.89 percent at 3,736 yuan.
Steel's gains helped push up prices of raw materials iron ore and coking coal.
Iron ore on the Dalian Commodity Exchange was last up 6.12 percent at 468 yuan per ton after earlier peaking at 458 yuan, the highest since October 25.
While the recent curbs on steel production in China have weighed on spot iron ore prices, ANZ commodity strategist Daniel Hynes said "the market is getting increasingly bullish about demand in 2018."
"With expectations of underlying demand to remain strong, this should see pent up demand hit the market when the curbs end," Hynes said in a note.
