Iron ore futures in China edged higher in early trade on February 17, underpinned by data showing a drop in stocks of the steelmaking raw material at the country's ports, and after the central bank cut the interest rate on its medium-term lending.

China's port inventory of imported iron ore dipped to 130.65 million tonnes, as of February 14, from 131.1 million tonnes a week earlier, data showed. That was 9% down from 143.60 million tonnes a year ago.

The Dalian Commodity Exchange's most-traded iron ore contract, which expires in May, was up 0.7% at 627.5 yuan/t ($89.97/t).

Supply concerns have also lifted spot prices of China-bound iron ore, with the benchmark 62% grade settling at a three-week-high $88.5/t on February 14.

On February 17, China's central bank cut the interest rate on its medium-term lending as policymakers sought to ease the drag to the businesses from a coronavirus outbreak that has severely disrupted activity.

Keeping iron ore's gains in check, however, China's downstream steel demand is widely expected to remain weak for some time as the coronavirus epidemic, which has now killed more than 1,700 people, shows no sign of easing.

Construction steel rebar on the Shanghai Futures Exchange was up 0.7%, while hot-rolled steel coil, used in cars and home appliances, rose 0.5%.

Stainless steel slumped 0.6%.

Other ferrous raw materials dropped, with Dalian coking coal down 0.2% and coke slipped 0.4%.

(Writing by Tian Zhang  Editing by Tammy Yang)
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