BEIJING: Iron ore futures gained on Tuesday, with sentiment boosted by upbeat economic data in top consumer China and mounting expectation of a flurry of pre-holiday replenishment from steelmakers in the coming weeks.

The most-traded May iron ore on China’s Dalian Commodity Exchange (DCE) climbed 2.26% to 995.5 yuan ($139.84) a metric ton, as of 0243 GMT, the highest since November 2023. The benchmark February iron ore on the Singapore Exchange was up 1.88% at $141.35 a ton, as of 0233 GMT, the highest since June 2022.

China’s factory activity expanded at a quicker pace in December due to stronger gains in output and new orders with the Caixin/S&P Global manufacturing purchasing managers’ index (PMI) rising to 50.8 at the end of 2023 from 50.7 in November, marking the fastest expansion in seven months and surpassing analysts’ forecasts of 50.4. This came after the official PMI fell to 49.0 in December from 49.4 the previous month, raising the case for fresh stimulus measures this year, official data showed on Sunday.

Expectation of more stimulus in 2024 mounted after China’s president Xi Jinping said on Sunday that China would consolidate and enhance the positive trend of its economic recovery this year.

Supporting prices of the key steelmaking ingredient is also mounting expectation of mills returning to the market to restock raw materials to meet production needs during the Lunar New Year holiday break in February, said analysts.

“Hot metal output will likely halt declines and rebound slightly as some steel mills have restarted operations of blast furnaces which were under scheduled maintenance previously,” analysts at Sinosteel Futures said in a note. Other steelmaking ingredients on the DCE also advanced, with coking coal and coke up 2.71% and 2.68%, respectively.