By Emily Ou Yong
Iron ore futures edged higher on Tuesday, as Beijing's restrictions on Australian supplies offset weaker demand from loss-making Chinese steel mills.
The most-traded September iron ore contract on China's Dalian Commodity Exchange (DCE) COMEX:TIO1! traded 0.27% higher at 741 yuan ($109.11) a metric ton, as of 0321 GMT.
The benchmark August iron ore (SZZFQ6) on the Singapore Exchange was 0.15% higher at $98.35 a ton.
Ongoing concerns over tightening supply continued to hang over the market, analysts at ANZ Research said in a note.
State-run iron ore buyer China Mineral Resources Group has restricted several domestic steel mills from purchasing any dollar-denominated cargoes of Fortescue's Super Special Fines product, expanding earlier curbs that targeted portside cargoes.
Seaborne arrivals at major Chinese ports last week also eased 2.916 million tons on-week, according to data from consultancy Mysteel, offering some near-term price support.
Gains were however limited by a seasonal slowdown in Chinese demand and tight mill margins squeezed by high coking coal prices, according to the analysts at ANZ.
Rebar producers were losing an average of 71 yuan per ton at end-June, while hot-rolled coil mills were losing 26 yuan per ton, according to a Mysteel survey, levels at which mills may cut production and reduce their demand for key ingredient iron ore.
Other steelmaking ingredients on the DCE fell, with coking coal NYMEX:ACT1! and coke (DCJcv1) down 0.62% and 0.21%, respectively.
Steel benchmarks on the Shanghai Futures Exchange were mixed. Rebar SGX:RBF1! traded flat and stainless steel COMEX:HRC1! rose 1.83%, while hot-rolled coil COMEX:EHR1! slipped 0.09% and wire rod (SWRcv1) declined 0.66%.
($1 = 6.7914 Chinese yuan)