Rising spot prices of iron ore also encouraged the short-covering as market participants expect the 70 yuan a tonne gap yesterday between futures and spot prices to narrow, said a futures trade in Shanghai.

"The short-term fundamental outlook for iron ore remains firm -- high production rate at steel mills and rising restocking," said the trader. Futures need "to restore the gap, while short covering also accelerated the gains."

Open interest of the January iron ore futures contract tumbled 4.4 percent to 1.61 million lots in the morning trade.

Tighter supplies of coking coal and coke driven by China's environmental crackdown on coal mines has also boosted the two steelmaking ingredients.

On the Dalian Commodity Exchange, coke futures surged 6 percent to a session high of 1,268.50 yuan and coking coal gained 4 percent to 965 yuan during morning trading.

The most-traded rebar on the Shanghai Futures Exchange rose 2.2 percent to 2,309 yuan a tonne by the midday break.

Iron ore for delivery to China's Tianjin port .IO62-CNI=SI traded 10 cents higher at $55.40 a tonne on Wednesday, according to The Steel Index. ($1 = 6.6691 Chinese yuan renminbi).

 

Source : reuters.com

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