IRON ore prices in China hit record highs Friday and booked their biggest quarterly gain since late 2016, buoyed by expectations that supply of the raw material in the world’s top steel producer will remain tight in the second half of the year.

Steel futures rose for the eighth straight session, the longest run for Shanghai rebar since August 2017, driven by falling stockpiles and mandatory output cuts in some steel hubs.

The most active September iron ore contract on the Dalian Commodity Exchange rose as much as 2.7 percent to 844 yuan (US$122.94) a ton, the highest since 2014 when trading in China’s iron ore futures started. It ended up 2.1 percent at 838.5 yuan.

The benchmark booked its seventh monthly gain and rose 47 percent in the June quarter, the biggest since the last quarter of 2016.

“The recent restart of the Brucutu iron ore mine in Brazil has brought no relief to the market, with tightness expected to persist for the foreseeable future,” said Daniel Hynes, senior commodity strategist at ANZ.

“Falling Chinese steel inventories also supported sentiment.”

Spot iron ore prices have jumped to the highest levels in more than five years, with benchmark 62 percent fines for delivery to China at US$116.70 a ton as of Thursday, data tracked by SteelHome consultancy showed.

Iron ore inventory at China’s ports had fallen to 116.75 million tons as of two weeks ago, the lowest since the start of 2017, SteelHome data showed, largely reflecting the impact of reduced supply from Brazil.

Brazil’s Vale SA, which shut mines for safety checks following a deadly tailings dam burst in January, has resumed full Brucutu operations, according to analysts. (SD-Agencies)