Chinese iron ore futures edged up on Tuesday amid expectations for a seasonal pick-up in steel demand and hopes that Beijing may step in to support economic growth.
Activity in China's factory sector inched up in March, a government survey showed, but is unlikely to dispel concerns the world's second-largest economy slowed more than expected in the first quarter.
"It's a technical correction for steel-related commodities futures, and after a string of weak economic data, the overall market atmosphere is improving amid hopes that Beijing will take some measures to maintain growth," said Ding Rui, an analyst with Zhongcai Futures in Shanghai.
Steel demand in China, the world's biggest producer and consumer, is expected to improve in April and May as construction activities pick up during warmer weather.
Jiangsu Shagang Group, China's biggest private steelmaker, raised rebar booking prices by 30 yuan for early April, in response to improved demand, traders said.
"Steel mills' orders are increasing slightly in March compared with the first two months, although their profit remains tiny and inventories are high. It's a bit positive for iron ore," said an iron ore trader in Beijing.
The most-traded September iron ore contract on the Dalian Commodity Exchange rose to a near four-week high of 800 yuan ($130) a tonne. It traded at 794 yuan by midday break, up 0.6 percent from Monday.
The most-active rebar for October delivery on the Shanghai Futures Exchange traded unchanged at 3,328 yuan ($540) a tonne. It touched a session high of 3,346 yuan on Monday, its loftiest since March 7.
Hot-rolled coil futures for October delivery traded on the Shanghai Futures Exchange rose 0.2 percent to 3,418 yuan a tonne by midday break.
Iron ore for immediately delivery to China .IO62-CNI=SI surged $4.5 to $116.8 a tonne on Monday, its highest since March 6, driven by Singapore Exchange-settled swaps as investors are increasingly hoping that the market is touching bottom.
However, record-level iron ore inventories of above 100 million tonnes sitting at Chinese ports are still curbing mills' buying interest, traders said.