Iron ore futures in China rose to a five-week high on Thursday, recovering from a recent fall on expectations that Beijing’s moves to weaken its currency will help boost steel exports by the world’s largest producer.

The rise in iron ore prices also followed explosions in chemicals warehouses on Wednesday in the port city of Tianjin, which has disrupted imports.

Iron ore futures for January delivery on the Dalian Commodity Exchange rose nearly 4 per cent to Rmb388.5 a tonne. Ore with 62 per cent iron content for immediate delivery to China rose 40 cents to $56.20 a tonne, according to an assessment from The Steel Index.

Iron ore, the main ingredient in steelmaking and a critical source of profitability for several leading mining houses, including BHP Billiton and Rio Tinto, has rallied over the past month, after hitting a seven-year low of $44.10 in early July.

China’s central bank this week engineered the biggest fall in the renminbi since the mid-1990s. That should help steel shipments, according to analysts.

“If China continues to raise exports of steel, this would require more imported iron ore to produce, and thus iron ore could be a net beneficiary of renminbi devaluation,” brokers CLSA said. “Though this would partially be offset by steel production cuts to counter Chinese exports in other countries.”

The European steel industry body Eurofer said on Thursday there may be “very real competitiveness impacts” for European steel companies due to Chinese steel imports that will now be even cheaper, Reuters reported.

China’s steel capacity is about 1.2bn tonnes, according to JPMorgan, more than three times its level a decade ago and nearly double its size from 2008.

Since domestic demand has been weak, much of that steel has made its way into global markets. The government has said it hopes to shift some of the overcapacity to countries along the Silk Road and fellow emerging market countries.

China’s domestic iron ore is considerably more expensive than overseas supply, meaning the country is likely to continue to rely on the seaborne market even with the devaluation of its currency. China consumes more than 70 per cent of the world’s seaborne iron ore.

The chemicals blast on Wednesday at Tianjin was also supportive of prices.

Miner BHP Billiton said while there was no damage to the iron ore discharging berths following the explosion, shipments and port operations have been disrupted.

Tianjin maritime authorities said they were delaying docking of some crude oil and chemicals ships. Transport of iron ore and other goods in the region has been halted due to the port area being cordoned off, traders said.

Fifteen steel mills surveyed by MySteel that source cargoes from Tianjin port said, on average, they have enough inventory to cover approximately one week.

The iron ore market is still suffering from oversupply from the world’s largest miners, however, which could cap any further price rises.