Dalian iron ore futures extended gains to a second session on Tuesday, after top steel producer China signalled an urgent need for additional economic stimulus and the central bank cut a foreign exchange reserves ratio to support the yuan.

The most-traded January contract for the steelmaking ingredient on China’s Dalian Commodity Exchange DCIOcv1 ended daytime trade 1.8% higher at 691.50 yuan ($99.67) a tonne.

Chinese policymakers signalled a renewed sense of urgency on Monday for steps to shore up the flagging economy, saying this quarter was a critical time for policy action amid a further loss of growth momentum.

Also on Monday, the People’s Bank of China said it would cut the foreign exchange reserve requirement ratio to 6% from 8% effective Sept. 15.

“September normally marks the beginning of peak construction in China and the hope is that recent policy announcements including yesterday’s FX reserve ratio (cut) will help support investment,” Westpac analysts said in a note.

But market confidence remained fragile amid lingering concerns about COVID-19 lockdowns and an ailing property sector in China.

Iron ore’s most-traded October contract on the Singapore Exchange reversed early gains, and was down 1.3% at $96.65 a tonne, as of 0700 GMT.

“Chinese authorities are likely creating an invisible zero COVID wall in the areas around Beijing for the next six weeks to facilitate a smooth Party Congress,” said Navigate Commodities Managing Director Atilla Widnell.

The ruling Communist Party will hold a once-every-five-years Congress starting on Oct. 16.

Signs of stabilising COVID-19 infections in technology hub Shenzhen prompted the Chinese city to ease a lockdown on Monday, but most of the 21.2 million residents of Chengdu city faced extended curbs.

Rebar on the Shanghai Futures Exchange rose 0.8%, while hot-rolled coil climbed 1.5%. Stainless steel gained 4.2%.

Dalian coking coal and coke added 0.3% and 0.7%, respectively.

Source: Reuters