MANILA: Dalian iron ore jumped more than 4% on Friday and was on course to post its biggest weekly gain since mid-December, buoyed by a combination of hopes that China’s stepped-up monetary easing would stimulate demand and fears over tight supply prospects.

The steelmaking ingredient’s most-traded May contract on China’s Dalian Commodity Exchange rose as much as 4.1% to 802 yuan ($126.22) a tonne, its strongest since Oct. 13.

Front-month March iron ore on the Singapore Exchange also leapt 4.1% to hit a contract high of $143.20 a tonne.

The bullish tone was sustained in both markets even as some traders stayed away ahead of next week’s Lunar New Year holidays.

Spot prices also rebounded strongly, with the benchmark 62%-grade material climbing to $140 a tonne on Thursday, the strongest since Sept. 3, according to SteelHome consultancy data.

After a rollercoaster ride in 2021 in the wake of mandatory steel output cuts aimed at reducing the sector’s carbon emissions, top steel producer China’s output is expected to rise in the first half of 2022, before declining in the second half, S&P Global Platts reported citing industry sources and market participants.

Despite China’s ambitious low-carbon goals, President Xi Jinping has said “reducing emissions is not about reducing productivity, and it is not about not emitting at all.”

“This has once again ignited hopes for a revival in raw material demand, which would be more visible post-February,” after the Beijing Winter Olympics, ING commodities strategists said in a note.

Warnings by major miners Fortescue Metals Group, BHP Group and Rio Tinto of coronavirus-led labour shortages in Australia added fuel to iron ore’s rally.

Construction steel rebar on the Shanghai Futures Exchange rose 1.8%, while hot-rolled coil climbed 1.7%. Stainless steel gained 0.4%.

Dalian coking coal dropped 0.8% and coke slipped 0.5%.