MANILA: Iron ore futures were subdued on Thursday as traders reassessed demand prospects in key consumer China, although prices remained largely supported by expectations for more policy stimulus to support the country’s economic rebound.

Iron ore and steel prices in China hit multi-month highs in January as markets rallied from early November on the back of Beijing’s stepped-up policy support for its ailing property sector and dismantling of strict COVID-19 curbs.

The steelmaking ingredient has risen more than 9% this year on the Singapore Exchange, while steel benchmarks in China, the world’s biggest producer of the construction and manufacturing material, had also posted monthly gains since November.

Steel prices are “running strongly under the support of cost and positive expectations,” Huatai Futures analysts said in a note. But analysts said the demand-side support for iron ore needed to be verified. The most-traded May iron ore on China’s Dalian Commodity Exchange ended morning trade 0.4% lower at 867 yuan ($129.17) a tonne.

SGX iron ore’s benchmark March contract was nearly flat at $125.95 a tonne. Other Dalian steelmaking inputs were modestly higher, with coking coal up 0.5% and coke gaining 0.4%.

On the Shanghai Futures Exchange, rebar and hot-rolled coil were almost steady, while wire rod slipped 0.2%. Stainless steel slumped 2.5%. “We believe more stimulus and infrastructure spending could be unveiled at the National People’s Congress in March, which is likely to boost demand for commodities further,” said ING commodities strategist Ewa Manthey.

However, Chinese regulators may step in to manage any potential upward pressure on commodity inflation. “Sharp price movements in iron ore have drawn scrutiny and warnings from regulators,” Manthey said in a report dated Jan. 17.

China’s state planner last month repeatedly warned against excessive speculation in iron ore prices, vowing to increase supervision of the country’s spot and futures markets.