Iron ore futures surged on Friday, solidifying their weekly gains, driven by continuing bets that top steel producer China would ease its strict COVID-19 rules early next year, and further fuelled by Beijing’s fresh pro-growth rhetoric.

The most-traded January iron ore on China’s Dalian Commodity Exchange DCIOcv1 ended daytime trade 4.9% higher at 662.50 yuan ($91.35) a tonne, on track for its first weekly rise in four weeks.

Dalian iron ore suffered its steepest monthly fall in 22 months in October due mainly to a gloomy outlook for Chinese demand for the steelmaking ingredient.

On the Singapore Exchange, benchmark December iron ore was up 5.5% at $86.20 a tonne, as of 0722 GMT.

The market reversal this week comes despite China’s National Health Commission saying on Wednesday the nation should unwaveringly stick to the zero-COVID policy, and authorities earlier denying knowledge of a rumoured committee being formed supposedly to assess border reopening in March.

Citing unnamed sources, Bloomberg reported China was working on plans to scrap a system that penalizes airlines for bringing virus cases into the country, a sign authorities are looking for ways to ease strict rules.

“The rumours of China exiting COVID-zero strategy in the first quarter of 2023 are picking up momentum, despite the government refuting them,” said Navigate Commodities Managing Director Atilla Widnell.

Also, this week Chinese regulators declared that economic development remained a priority, seeking to allay foreign investors’ fears that ideology could take precedence as President Xi Jinping extends his term and has taken tight control of the new Politburo Standing Committee.

Steel futures and other Dalian steelmaking inputs also extended their rally, with coking coal DJMcv1 and coke DCJcv1 up 5.3% and 3.8%, respectively.

On the Shanghai Futures Exchange, rebar SRBcv1 and hot-rolled coil SHHCcv1 both climbed 2%, wire rod SWRcv1 gained 1.9%, and stainless steel SHSScv1 advanced 0.8%.

Source: Reuters