SINGAPORE: Iron ore futures prices extended gains to a second straight session on Friday and were headed for a weekly rise, as the prospect of fresh Chinese stimulus and a recovery in the top consumer’s steel demand lifted market sentiment.

The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) ended morning trade 0.79% higher at 701.5 yuan ($98.70) a metric ton.

The contract has gained 2.86% so far this week. The benchmark October iron ore on the Singapore Exchange, however, was 0.27% lower at $94.5 a ton, as of 0331 GMT.

China is poised to cut interest rates on more than $5 trillion of outstanding mortgages as early as this month, Bloomberg News reported on Thursday.

“We would not expect anywhere close to a 1:1 transmission into retail sales, given consumer confidence is near all-time lows and households’ willingness to save was near historic highs. Nonetheless, it is a significant move that should provide real tangible benefits to households and support consumption,” ING analysts said in a note commenting on the move.

Housing price data expected on Saturday will be scrutinised closely for signs of stabilisation, ING said. Meanwhile, inventories of five major finished steel products held by Chinese traders decreased for a ninth consecutive week over Sept. 6-12 to a nearly eight-month low, data from Chinese consultancy Mysteel showed.

The 6.3% week-on-week fall reflected the further improvement in spot trading and a modest rise in replenishment needs among end-users before China’s Mid-Autumn Festival holiday, said Mysteel. Chinese markets will be closed from Sept. 16-17 for the holiday and resume trading on Sept. 18.

Other steelmaking ingredients on the DCE were stronger, with coking coal and coke up 0.55% and 1.77%, respectively. Most steel benchmarks on the Shanghai Futures Exchange posted gains. Hot-rolled coil climbed 1.25%, rebar advanced about 1.1%, wire rod added almost 1.0%, although stainless steel dipped 0.26%.