Benchmark Dalian and Singapore iron ore futures surged on Thursday, buoyed by growing hopes of improved demand for the steelmaking ingredient in China after reports of a possible easing of COVID-19 curbs in the world’s top steel producer.

The most-traded May iron ore contract on China’s Dalian Commodity Exchange ended daytime trading 6.8% higher at 797.50 yuan ($126.27) a tonne, after soaring as much as 9.7% to its highest since Feb. 11.

On the Singapore Exchange, the front-month April iron ore SZZFJ2 was up 7% at $159.55 a tonne, after touching a contract high of $162.40 earlier in the day.

“The whole China ferrous futures complex is reacting zealously to reports that the country is contemplating exiting its ‘zero-tolerance’ stance towards COVID-19, for which the ‘stop/start’ impact on the economy has been a heavy burden,” said Atilla Widnell, managing director at Navigate Commodities in Singapore.

“Fewer intermittent lockdowns will support China’s pursuit to getting the economy back on track.”

But it is still too early for China to consider easing its stringent coronavirus restrictions, with the highly infectious Omicron strain still capable of causing large numbers of deaths, said the head of an expert group on COVID-19 prevention.

In the spot market, imported iron ore traded at $147.50 a tonne on Wednesday, the highest since Feb. 14, according to SteelHome consultancy data.

Chinese steel futures and other steelmaking ingredients also extended their rally, rebounding after market regulators last month sought to curb surging prices of iron ore and coal in particular.

Chinese authorities have vowed to prevent “excessive hoarding” of iron ore and ensure that traders bring inventories back to a reasonable level.

On the Shanghai Futures Exchange, hot-rolled coil, which is steel used in car bodies and home appliances, rose 2.6%. Construction steel rebar gained 0.6%, while steel advanced 4.8%.

Dalian coking coal climbed 4.2% and coke added 3.4%.

Source: Reuters