MANILA: Dalian iron ore rose on Friday to a six-week peak, while the steelmaking ingredient’s benchmark price in Singapore hit the highest in two weeks, extending a rally spurred by surprise growth in China’s factory activity in May.

Iron ore also headed for sharp weekly gains, as market commentators continued to speculate about top steel producer China rolling out additional stimulus to support an uneven and fragile post-COVID economic recovery. The most-traded September iron ore on China’s Dalian Commodity Exchange ended daytime trading 2.9% higher at 745.50 yuan ($107.85) a tonne, off a session high of 755.50 yuan, its strongest since April 21.

Dalian iron ore has risen nearly 9% this week, “in a sign that onshore traders are becoming more upbeat about the outlook for demand in China”, Westpac analysts said in a note.

On the Singapore Exchange, iron ore’s benchmark July contract rose as much as 1.8% to $103.95 a tonne, its highest since May 19, stretching its weekly gain around 6%.

China’s factory activity unexpectedly swung to growth in May from decline, the Caixin/S&P Global manufacturing purchasing managers’ index showed on Thursday.

Analysts, however, said further policy support is needed to ensure China’s economic recovery will be sustained as other activity data were uninspiring, including the country’s April industrial output which grew much less than expected. Other Dalian steelmaking ingredients also rose on Friday, with coking coal and coke up 3.2% and 3.8%, respectively.

As raw material prices rose, steel benchmarks extended gains. Rebar on the Shanghai Futures Exchange climbed 2.5%, hot-rolled coil added 2.7%, wire rod rose 1.2%, and stainless steel climbed 2.0%.

Chinese steel mills’ blast furnace capacity utilization rate stood at 89.66%, largely stable over May 26-June 1 compared with the previous week, based on industry consultancy and data provider Mysteel’s latest survey of 247 producers.