DALIAN iron ore futures extended gains after a week-long Chinese New Year holiday, climbing more than 3 per cent to a contract high on Monday (Jan 30), amid optimism about demand from the world’s top steel producer.

The most-traded May iron ore contract on China’s Dalian Commodity Exchange ended daytime trading 2 per cent higher, at 873.50 yuan (S$169.90) a tonne. It earlier hit a contract high of 890 yuan.

On the Singapore Exchange, the steelmaking ingredient’s benchmark March contract reached a session high of US$130.55, then eased to US$127.80 a tonne as at 0714 GMT.

Navigate Commodities managing director Atilla Widnell said: “We will need to wait and see if the reopening rally maintains the verve with which it entered the holiday period, or whether this optimism is now running on fumes.”

Overall market sentiment was positive. Traders cheered data which showed Chinese New Year holiday trips in China surging 74 per cent from last year. This came after authorities scrapped Covid-19 travel curbs in December 2022.

Adding to the upbeat mood, the central bank said on Sunday that it would roll over three lending tools to increase support for targeted sectors of the economy.

Rebar and hot-rolled coil on the Shanghai Futures Exchange both rose 0.6 per cent, while wire rod climbed 1.3 per cent. Stainless steel bucked the trend, slipping 0.1 per cent. Dalian coking coal dipped 1.4 per cent, while coke gained 0.4 per cent.

SteelHome data showed that in the spot market, the benchmark 62 per cent-grade iron ore was trading at US$128.50 a tonne, the highest since June 2022.

Last Friday, Australia’s Fortescue Metals Group said it was expecting a solid economic rebound in top iron ore buyer China. But worries loomed that regulatory intervention against price speculation – which China has warned about – would curb gains.

Navigate Commodities’ Widnell said China would “become more vigorous and vocal in its narrative on what it considers to be overvalued iron ore prices – if they continue to rise”.