SINGAPORE: Iron ore futures retreated on Monday as traders adopted a wait-and-see stance after last week’s rally, spurred by optimism over China’s policy support for its ailing economy and near-term demand prospects for the steelmaking ingredient.

The most-traded January iron ore on China’s Dalian Commodity Exchange ended daytime trade 1% lower at 811 yuan ($111.27) per metric ton. On the Singapore Exchange, iron ore’s benchmark September contract was down 1.4% at $112.15 a ton by 0700 GMT.

It scaled a four-week peak of $114.85 last week. Caution prevailed in the market despite China’s cabinet approving on Friday guidelines for planning and construction of affordable housing at a meeting chaired by Premier Li Qiang, according to state media Xinhua news agency. “China stimulus updates remain the focus for the outlook,” National Australia Bank analysts said in a note. “We expect further measures are likely required to improve the outlook.”

The market is also awaiting this week’s manufacturing activity data as well as earnings reports, particularly from China’s major property developers and steel producers, for further guidance, analysts said. “Major players in the region will be releasing their manufacturing PMI reports.

We expect these figures to show a further deterioration, as we await more substantial support from the government to boost domestic demand while global demand remains weak,” ING economists said.

The region’s manufacturing data, including those of top steel producer China’s strategic trade partners, may reflect the country’s economic struggles, they said.

Profits at China’s industrial firms fell 6.7% in July from a year earlier, extending this year’s slump to a seventh month, data on Sunday showed. Most steel benchmarks in Shanghai fell.

Rebar slumped 1.3%, hot-rolled coil dropped 1.4%, wire rod lost 0.9%, while stainless steel edged up 0.1%. Other steelmaking ingredients also dipped, with coking coal and coke down 0.8% and 1.5%, respectively.