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Aug 1 Iron ore prices rose to their highest in more than four weeks on Monday, extending last week's solid gains spurred by hopes of increased Chinese infrastructure spending and prospects of property sector bailouts.
The most-traded iron ore, for September delivery, on China's Dalian Commodity Exchange jumped 4.7% to 817.50 yuan ($121.15) a tonne in early trade, its strongest since June 30.
On the Singapore Exchange, the steelmaking ingredient's front-month September contract climbed by up to 5.2% to $120.95 a tonne, also the highest since June 30.
China has urged local governments to speed up the use of special bonds for infrastructure that are mature and profitable, state media reported on Friday, following a cabinet meeting.
Fitch Ratings said it expects the Chinese government to roll out more financial support to boost infrastructure after this year's special-bond issuance quota was almost filled by end-June.
Iron ore's gains last week were partly driven by reports about an up to 300 billion yuan ($44.47 billion) rescue fund for ailing Chinese property developers.
China's policy banks were also reportedly planning to issue 800 billion yuan of credit facilities to help fill the funding gap for major projects and stimulate infrastructure investment.
"Fitch believes the government may take more steps beyond these to revitalise the economy after recent lockdowns to control COVID-19 outbreaks, weakness in the property market and rising unemployment," the agency said in a statement.
Construction steel rebar on the Shanghai Futures Exchange rose 1.9%, hot-rolled coil climbed 1.4%, and stainless steel advanced 3.1%.
Dalian coking coal gained 1.8% and coke added 3.3%.
But analysts warned of continued market volatility, with the Chinese government and steel industry reportedly agreeing to mandate further steel production cuts in the second half of 2022.
That could mean "more pain" for producers of steelmaking ingredients, said Navigate Commodities Managing Director Atilla Widnell. ($1 = 6.7455 Chinese yuan) (Reporting by Enrico Dela Cruz in Manila; editing by Uttaresh.V)
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