Dalian iron ore prices rose on Thursday on hopes of robust demand for the steelmaking ingredient in China when steel production curbs are eased after next month’s Beijing Winter Olympics.

Prospects of tight supply also kept a bullish tone intact for iron ore, even as some traders stayed out of the market ahead of next week’s Lunar New Year holidays.

The most-traded May iron ore contract on China’s Dalian Commodity Exchange rose as much as 2% to 781 yuan ($123.07) a tonne, its highest since Oct. 13, before ending daytime trading 0.5% higher at 769 yuan.

Iron ore’s most-active March contract on the Singapore Exchange climbed as much as 1% to $139.05 a tonne.

Demand for iron ore is expected to pick up when traders return from their holidays and further after the Winter Olympics as steel mills are likely to replenish inventories, analysts at Huatai Futures said in a note.

Industrial operations in top steel producer China are expected to be curtailed during the Olympics to ensure smog-free skies.

“After the holiday, (the outlook for) consumption will continue to remain optimistic,” Huatai analysts said. “In terms of supply, due to the recent heavy rains in Brazil and… in Australia, both arrivals and shipments have dropped significantly.”

Spot prices of China-bound iron ore have also rebounded, with the benchmark 62%-grade material climbing to $139 a tonne on Wednesday, the highest since Sept. 3, according to SteelHome consultancy data.

Warnings by major miners Fortescue Metals Group, BHP Group and Rio Tinto of coronavirus-led labour shortages in Australia added fuel to the rally in iron ore prices, that is also underpinned by China’s stepped-up policy easing support for its slowing economy.

Construction steel rebar on the Shanghai Futures Exchange slipped 0.3%, while hot-rolled coil shed 0.2%. Stainless steel SHSScv1 dropped 0.4%.

Dalian coking coal DJMcv1 jumped 3%, but coke fell 0.4%.

Source: Reuters