Chinese iron ore futures jumped more than 5% on Wednesday, after falling for three straight sessions, as hopes of demand recovery at mills rose, even as COVID-19-led lockdowns in the country disrupted economic activity.

The most-active iron ore futures on the Dalian Commodity Exchange, for September delivery, surged 6.6% to 831 ($123.72) yuan a tonne — the biggest percentage gain since March 7. The contract closed up 5.3% at 821 yuan per tonne.

On the Singapore exchange, the most-traded June iron ore contract gained 4.3% to $131.85 per tonne.

“The (pandemic’s) impact on areas such as Tangshan is easing, and raw materials’ transportation has resumed,” analysts with Haitong Futures said in a note, adding that daily molten iron output recovered from previous weeks.

However, profits at mills are relatively low and steel production controls may still weigh on mills’ utilisation rates, said the note.

China’s producer price index rose 8% year-on-year in April, the slowest pace in a year, data from the National Bureau of Statistics showed, giving policymakers headroom for more stimulus to shore up a flagging economy.

Coking coal prices on the Dalian bourse DJMcv1 ended up 2% to 2,663 yuan a tonne and coke futures DCJcv1 increased 2.3% to 3,418 yuan per tonne.

The jump in raw material prices also drove steel products on the Shanghai Futures Exchange.

Construction material steel rebar SRBcv1 for October delivery advanced 2% to 4,681 yuan a tonne. Hot rolled coils SHHCcv1, used in the manufacturing sector, added 1.9% to 4,775 yuan per tonne.

China’s top listed steel producer Baoshan Iron & Steel 600019.SS said on Tuesday it would cut June delivery prices for hot rolled and cold rolled products by 100 yuan per tonne.

Shanghai stainless steel SHSScv1 was up 2% at 19,055 yuan a tonne at close.

Source: Reuters