Iron ore posted a second straight monthly increase this year on speculation that demand for imports in China may be improving, helping to absorb a global surplus as local supplies in the largest buyer are displaced.

Ore with 62 percent content delivered to Tianjin climbed 1.9 percent this month, according to data from The Steel Index Ltd. The raw material fell 0.3 percent to $95.60 a dry ton today, extending losses this year to 29 percent. Prices gained 2.2 percent in June, snapping six monthly losses.

Iron ore rebounded last month from the lowest since 2012 amid signs that rising supplies from Australia and Brazil are starting to spur the closure of some higher-cost production in China. The price will have a dramatic recovery this half, Sanford C. Bernstein Ltd. forecast in a July 9 report, saying that it’s now cheaper for steel mills in China to buy seaborne supply rather than domestic material. The commodity entered a bear market in March and has been below $100 since May 19.

“Iron ore prices are lifting in part due to a pickup in demand from China,” Paul Bloxham, chief Australia economist at HSBC Holdings Plc in Sydney, said by e-mail today. “We expect this to continue and for iron ore prices to head above $100 a ton in the near future.”

China said this month that gross domestic product grew 7.5 percent in the second quarter from a year earlier, with expansion from the previous period indicating an annual rate of 8.2 percent. Fixed-asset investment accelerated in June for the first time since August. Asia’s largest economy accounts for about 67 percent of global seaborne iron ore demand.

Closed Mines

Between 20 percent and 30 percent of the country’s iron ore mines have closed, according to the China Metallurgical Mining Enterprise Association. A large proportion of China’s output is loss-making, the Canberra-based Bureau of Resources and Energy Economics said last month.

Global seaborne output will exceed demand by 72 million tons this year and 175 million tons in 2015, Goldman Sachs Group Inc. said in a report dated July 23. The raw material will average $80 in 2015 from $107 this year, according to Goldman.

Iron ore output at BHP Billiton Ltd. (BHP), the world’s biggest mining company, increased 19 percent to 56.6 million tons in the three months to June from a year earlier. Rio Tinto Group boosted production 11 percent to 57.5 million tons in the period, while Vale SA (VALE5), the world’s largest iron ore producer, said output rose 13 percent to 79.4 million tons. The companies say their lower-cost output will displace marginal Chinese supply.

BHP shares climbed 1.8 percent in Sydney this year, while stock in Rio Tinto dropped 2.6 percent and Fortescue Metals Group Ltd. (FMG) retreated 15 percent. In Brazil, Vale is 12 percent lower in 2014.�