Reuters reported that spot iron ore prices hit their highest in almost five months as traders snapped up cargoes, betting Chinese demand will stay firm and supply may be limited in the first quarter due to seasonal weather disruptions in exporters Australia and Brazil.
Rising steel prices also aided the iron ore rally, with Shanghai rebar futures climbing on Friday to levels last seen in August after data showed China's factory activity picked up pace in December.
The HSBC flash manufacturing index for China rose to 50.9, a 14 month high and the fifth straight monthly gain, driven by domestic demand.
Sellers in China upped price offers for imported iron ore cargoes by USD 2 to USD 3 per tonne on Friday, a day after the benchmark 62% grade. It was the highest for the benchmark since July 18 and Thursday marked its eighth consecutive day of gains, the longest winning streak since June when it rose for 10 straight days.
A trader based in Singapore said that "It looks like there is more room for prices to rise. Port stocks in China are running low and traders are replenishing and taking positions."
Iron ore stored at main Chinese ports stood at 77.8 million tonnes last week, the lowest since January 2011.
