MANILA: Dalian and Singapore iron ore futures hit one-week highs on Monday, supported by hopes that Chinese steelmakers would restart dozens of blast furnaces idled due to slumping margins and weak demand to replenish inventories.

Easing COVID-19 restrictions in Shanghai and scrapped or relaxed testing mandates in several Chinese cities also buoyed markets battered over the last two weeks amid concerns over weak demand in the world’s biggest steel producer.

The most-traded September iron ore on China’s Dalian Commodity Exchange ended daytime trade 4% higher at 775 yuan ($115.92) a tonne, after earlier touching 782.50 yuan, its highest since June 20. On the Singapore Exchange, the steelmaking ingredient’s front-month July contract climbed up to 5.7% to $120.60 a tonne, its strongest since June 20.

Dalian iron ore had tumbled 22% in a record 10-session sell-off until June 23, while SGX iron ore had slumped to its weakest close this year at $108.14 a tonne on Thursday — dragged down by a slowing steel production in China.

The market panic seen last week has eased, Sinosteel Futures analysts said in a note. Limited steel production is expected to help reduce high inventories, they said, and “the reduction in supply will help prices to stop falling”.

But the overall outlook for China’s ferrous complex has not changed fundamentally, analysts said. China’s strict zero-COVID protocols will keep lockdown risks high, while weather conditions unfavourable to construction projects are also a concern.