Iron ore was poised to book solid gains for the week, despite a mixed morning session in Shanghai on Friday, as traders returned from New Year holidays feeling optimistic about demand prospects in top steel producer China.

The steel-making ingredient’s most-active May contract on China’s Dalian Commodity Exchange ended the morning trade up 0.4% at 711.50 yuan ($111.56) a tonne, after touching 725.50 yuan earlier in the session, its highest since Oct. 27.

Dalian iron ore was on track for a weekly gain of more than 5%.

On the Singapore Exchange, iron ore’s most-traded contract expiring by end-February was down 0.4% at $126.85 a tonne, after earlier hitting $128.25, its strongest since Dec. 22. Steel products were also firmer, with construction steel rebar on the Shanghai Futures Exchange up 0.6%, while hot-rolled coil climbed 1.5%, both rising for a fourth straight session. “The current rise in raw materials and the limited production during the Winter Olympics have boosted steel prices to a certain extent, but the demand side is still weak,” Sinosteel Futures analysts said in a note.

China is expected to curb mills’ operations in its steel production hubs to ensure clean air during the Beijing 2022 Olympics next month.

But analysts said hopes for an easing of steel production controls after the Games have helped underpin iron ore.

The spot price of benchmark 62%-grade iron ore in China jumped to $127.50 a tonne on Thursday, the highest since Dec. 21, based on SteelHome consultancy data.

Dalian coking coal slumped 3.8% after a six-session rally, while coke shed 0.9% following three days of gains.

Shanghai stainless steel, however, fell as much as 2% and was set for a weekly decline as supply conditions have improved while replenishment demand has dissipated in China.

Source: Reuters