MANILA: Iron ore prices on Friday were on track for weekly declines despite some gains as Covid-19 outbreaks in China soured sentiment, but losses were limited by a steady stream of state policy support for the world’s second-biggest economy.

Iron ore’s most-traded May iron ore on China’s Dalian Commodity Exchange was up 1% at 848 yuan ($123.59) a tonne, as of 0310 GMT. But the benchmark contract is down nearly 1% for the week so far.

On the Singapore Exchange, the steelmaking ingredient’s benchmark February contract rose 0.4% to $115.55 a tonne, though it was also on track for a weekly loss of 0.5%.

Weak market fundamentals, combined with a challenging macroeconomic environment, will likely keep prices volatile ahead of top steel producer China’s week-long Spring Festival celebration from Jan. 21, and possibly even beyond, analysts said.

Industrial and construction activities in China usually grind to a halt during winter and holiday breaks. Next week, the spotlight will be on China’s latest economic indicators, including fourth-quarter GDP data, which should show the impact of surging Covid-19 infections on industrial activity and demand.

ING economists expect Chinese retail sales to face a deeper contraction on a yearly basis, while industrial production may see a mild contraction in December.

“As a result, GDP growth for the fourth quarter of 2022 should fall into a slight year-on-year contraction,” they said in a note. Moving forward, however, analysts said China’s economic recovery prospects are bright, with more support measures being rolled out particularly for the ailing property sector. Rebar on the Shanghai Futures Exchange rose 2.4%, hot-rolled coil climbed 2.3%, and wire rod gained 1.4%.

Stainless steel edged up 0.1%. Other Dalian steelmaking inputs also rose, with coking coal and coke up 0.8% and 1.7%, as supply concerns remain despite China’s move to resume coal imports from Australia.