MANILA: Iron ore prices scaled multi-week highs on Tuesday, with benchmark futures in Dalian and Singapore rising for a fourth straight session, underpinned by hopes of improved demand for the steelmaking ingredient in top steel producer China.

The most-traded iron ore for May delivery on China’s Dalian Commodity Exchange rose as much as 2.7% to 703 yuan ($110.28) a tonne, its highest level since Oct. 28.

Iron ore’s February contract on the Singapore Exchange climbed 4.1% to $129.65 a tonne.

In China’s spot market, the benchmark 62%-grade iron ore traded at $125 a tonne on Monday, steadily advancing since Dec. 15 to hit the highest level since Oct. 13, SteelHome consultancy data showed.

“Once again, the direction, momentum and quantum of iron ore prices is largely being dictated by sentiment given that very little has changed from a global supply-demand balance,” said Atilla Widnell, managing director at Navigate Commodities in Singapore.

Dalian iron ore in particular has rebounded more than 30% from a November low, with some gains coming after Beijing early this month vowed to prioritise stabilising economic growth in 2022, fuelling hopes for more stimulus measures.

But downside risks linger, such as the increased likelihood of another COVID-19 outbreak and lockdown in China, and a bloated inventory of imported iron ore now piling up at the country’s ports.

The portside iron ore stockpile last week stood at the highest level since mid-2018, SteelHome data showed.

Steel futures on the Shanghai Futures Exchange retreated after a six-session rally, with rebar falling as much as 2.1%, while hot-rolled coil shed 2.7%. Stainless steel gained 1%.

“Despite falling domestic steel rebar consumption, the bulls are lapping up repeated statements on the prospect of stimulus-driven demand for next year,” Widnell said. Dalian coking coal dropped as much as 1.5% and coke fell 3.4%.