Iron ore futures in Asia fell on Friday after a survey of post-Lunar New Year inventories of steel products in China showed a significant increase, dampening hopes for mills to ramp up output immediately following the week-long holiday.

The steelmaking ingredient’s most-active May contract on China’s Dalian Commodity Exchange dropped 0.3% to 1,117 yuan ($172.85) a tonne by 0700 GMT, declining for the first time in seven sessions.

On the Singapore Exchange, the most-traded March iron ore slipped 0.6% to $168.55 a tonne, after a four-day rally.

Stocks of the five major finished steel products held by the 184 Chinese mills under Mysteel consultancy’s regular survey grew by a sharp 46.1% during Feb. 4-17.

Consumption among steel end-users stagnated during the Feb. 11-17 holiday while mills continued to produce during the break, Mysteel reported.

“Previously, the market had expectations for better post-holiday demand,” said analysts at Sinosteel Futures in a note, but added demand does not usually pick up until after China’s Lantern Festival, which falls on Feb. 26.

Still, Dalian iron ore was poised for a third consecutive weekly gain in the holiday-shortened trading week that saw it hitting the highest level in eight weeks on Thursday.

Concerns about tight supply and brightening prospects for demand outside top steel producer China should continue supporting iron ore prices, analysts said.

Spot iron ore bound for China traded at $171 a tonne on Thursday, up 6.2% from last week, SteelHome consultancy data showed.

Construction steel rebar on the Shanghai Futures Exchange gained 0.3% while hot-rolled coil lost 0.5%.

Stainless steel jumped 3.9% as a tropical storm set to hit the nickel mining hub in southern Philippines, China’s biggest ore supplier, exacerbated worries about declining port inventory of the raw material in the world’s top steel producer.

Dalian coking coal dropped 0.8% and coke slipped 0.2%.

Source: Reuters