BEIJING: Iron ore futures retreated on Friday as falling hot metal output weighed on sentiment, but prices were still headed for a second consecutive weekly gain on lingering hopes for more stimulus from top consumer China.

The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 2% lower at 845.5 yuan ($116.3) a metric ton, after hitting a more than one-month high on Thursday. The contract posted a rise of 3.2% week-on-week.

The benchmark August iron ore on the Singapore Exchange fell 3.3% to $110.2 a ton, as of 0723 GMT, a rise of 3.6% so far this week. Prices of the key steelmaking ingredient surrendered some gains from earlier this week, following a wave of profit taking amid lower hot metal output, a blast furnace product which is typically used to gauge ore demand.

Average daily hot metal output among steelmakers surveyed fell for a second straight week by 0.1% on the week to about 2.39 million tons as of July 4, data from consultancy Mysteel showed.

A rally in iron ore price recently suppressing margins among some steelmakers also added to market caution, analysts said. “Some mills showed less interest in ramping up output after suffering losses. And we expect limited upside room for hot metal output ahead,” analysts at Galaxy Futures said in a note.

Among other steelmaking ingredients on the DCE, coking coal and coke dropped 3.8% and 3.9%, respectively. Steel benchmarks on the Shanghai Futures Exchange lost ground. Rebar shed 1.7%, hot-rolled coil fell 1.2%, wire rod declined 1.3% and stainless steel was little moved.

“After the third plenum, the ferrous market will likely face some downward pressure. Also, we do not think there will be robust upward momentum following a wave of rapid price rally,” Galaxy analysts said. The third plenum will be held from July 15 to 18, focusing on deepening reforms and promoting the modernisation of China.