Iron ore heads for weekly gains on resilient China demand

BEIJING, June 6 (Reuters) - Iron ore futures prices rose to one-week high on Friday and were set for weekly gains, buoyed by progress in Sino-U.S. talks and steady demand from top consumer China, although seasonally slow steel consumption capped gains.

The most-traded September iron ore contract on China's Dalian Commodity Exchange (DCE) DCIOcv1 was up 1.21% at 710 yuan ($98.84) a metric ton, as of 0231 GMT, the highest since May 29.

The contract has logged gains of 0.9% so far this week.

The benchmark July iron ore SZZFN5 on the Singapore Exchange was up 0.9% at $95.7 a ton, as of 0226 GMT, rising 0.1% this week.

It touched its highest since May 29 at $96.4 earlier in the session.

Market sentiment was upbeat after U.S. President Donald Trump and Chinese leader Xi Jinping confronted weeks of brewing trade tensions and a battle over critical minerals in a rare leader-to-leader call on Thursday.

"The call between the Sino-U.S. leaders is a sign of easing trade tensions between the two superpowers, sparking risk-on sentiment," analysts at Everbright Futures said in a note.

Near-term ore demand is also expected to stay firm as steelmakers need to stockpile cargo to sustain production, with hot metal output hovering at relatively high levels and mills' in-plant inventory staying low, analysts at Chaos Ternary Futures said.

Average daily hot metal output, a gauge of iron ore demand, stood at 2.42 million tons as of June 5, up 2.6% from a year earlier, a survey from consultancy Mysteel showed.

Steel consumption, however, showed signs of weakening as high summer temperatures hindered construction.

Other steelmaking ingredients, including coking coal DJMcv1 and coke DCJcv1 were up 3.91% and 1.19%, respectively.

Most steel benchmarks on the Shanghai Futures Exchange advanced. Rebar SRBcv1 ticked 0.85% higher, hot-rolled coil SHHCcv1 added 0.81%, wire rod SWRcv1 climbed 0.88% while stainless steel SHSScv1 nudged down 0.08%.

($1 = 7.1834 Chinese yuan)