MANILA: Dalian iron ore futures hit a fresh six-month high on Thursday, propelled by brightening demand prospects in top steel producer China as the country set out plans to support its economic growth.

The most-traded iron ore for May delivery on China’s Dalian Commodity Exchange gained as much as 2.5% to 824 yuan ($118.56) a tonne in early trade, its highest since June 15. As the Chinese economy faces risks from rapidly spreading COVID-19 infections and a bleak outlook for global growth, policymakers are aiming to boost the scale of consumption and investment, the official Xinhua news agency said on Wednesday.

Boosting domestic demand will help China to pursue higher quality economic growth and cope with external risks, Xinhua said, citing the 2022-2035 plans issued by the cabinet. “The accelerated implementation of plans to stabilise the economy (and) the optimisation of epidemic prevention policies... have boosted market sentiment,” Zhongzhou Futures analysts said in a note.

Chinese steel benchmarks were also broadly higher, with rebar on the Shanghai Futures Exchange up 1.6%, hot-rolled coil rising 1.2% and wire rod gaining 1.3%. Stainless steel slipped 0.3%. However, traders tempered their optimism, particularly about iron ore demand in the near term. On the Singapore Exchange, the steelmaking ingredient’s benchmark January contract was down 0.3% at $108.30 a tonne, as of 0153 GMT, reversing early gains.

Traders were concerned about the impact of rising COVID-19 cases in China on consumer and industrial activity in the near term. Data showed China’s industrial output rose 2.2% from a year earlier in November, slowing from the 5.0% pace seen in October, as widespread COVID-19 curbs disrupted activity and weakened supply and demand. Analysts said iron ore prices in 2023 might also be curbed by an anticipated increase in overall supply.

Among other Dalian steelmaking inputs, coking coal edged up 0.1%, while coke dipped 0.7% following recent gains.