SHANGHAI: Ferrous futures in top steel producer China rose on Thursday, with Dalian iron ore extending gains into a fourth session, as the country’s faltering economic recovery underpinned hopes for additional policy support.

The most-traded iron ore on the Dalian Commodity Exchange ended daytime trading 1.6% higher at 1,234 yuan ($191.02) a tonne.

Iron ore’s most-active August contract on the Singapore Exchange advanced 1.9% to $214 a tonne by 0703 GMT.

China’s economy grew more slowly than expected at 7.9% in the second quarter from a year earlier, reflecting slowing manufacturing activity, the impact of higher raw material costs and new Covid-19 outbreaks weighing on the recovery momentum.

The disappointing GDP data boosted expectations that China will keep policy rates stable at current levels “for an extended period” and may roll out “more structural monetary measures” in the second half of the year, analysts at ANZ said in a note.

“We believe the authorities will actively de-risk the financial system in H2,” they said.

A further liquidity boost after last week’s 50 basis point reduction in banks’ reserve requirement ratio may help boost growth in Chinese demand for steel and its raw materials, which some analysts expect to slow in the second half.

Construction steel rebar on the Shanghai Futures Exchange climbed 0.9% while hot-rolled coil gained 0.5%, despite data showing China’s crude steel output fell 5.6% in June from a record level in May.

Shanghai stainless steel extended its record-setting rally amid strong domestic demand and low inventory, climbing as much as 3.4% to 18,240 yuan a tonne, its strongest level since trading of stainless steel contracts started on the Shanghai bourse in 2019.

Dalian coking coal advanced 0.6%, while coke jumped 2.7%.

Benchmark 62%-grade iron ore’s spot price in China remained supported around $220 a tonne on Wednesday, SteelHome consultancy data showed.—Reuters