Iron ore prices rose after China's state-owned buyer expanded restrictions on Australia's Fortescue, alongside the return of buyers to the market after prices fell over the past two months.

Futures for the steelmaking material rose 1.2% to $99 per ton before paring gains.

China Mineral Resources Group asked a number of steel mills and local traders not to buy any new dollar-denominated shipments of Fortescue's Super Special Fines, escalating its dispute with the Australian mining company.

The increasing restrictions on Fortescue have provided some support to the iron ore market in recent weeks.

The seasonal slowdown in Chinese demand and rising seaborne supplies have pushed iron ore down about 12% from its peak in mid-May, despite the market stabilizing over the past three weeks.

Yu Dian, a principal researcher at Citic Futures, said this rebound is likely driven by a decline in valuations across the ferrous metals sector following the price drop.

She added that markets expect lower chances of interest rate hikes by the Federal Reserve and await further economic stimulus measures in China. However, the broader iron ore market still faces pressure.

What is the forecast for iron ore prices this year?

A recent report by the Australian government forecast an average iron ore price of $91 per ton this year, before declining to $64 per ton by 2031.

Pancy Bai, an analyst at Horizon Insights in Shanghai, said: 'From the perspective of actual supply and demand, Chinese steel mills' profits continue to shrink, and expectations of declining demand for coke and iron ore are increasing.'

Iron ore rose 0.4% to $98.20 per ton in Singapore at 12:05 p.m. local time.

Futures in Dalian also climbed 0.9% to 740.5 yuan per ton, after rising earlier by 1.4%.