China's steel futures climbed on Thursday on expectations that Beijing's measures to prop up a virus-hit economy will help revive demand for the manufacturing and construction material.
The optimism added fuel to a rally in iron ore prices that was initially driven by worries about tightening supplies of the steelmaking raw material from Australia and Brazil.
The latest measure is a cut in the benchmark lending rate on Thursday to lower financing costs for businesses hurting from shutdowns and lockdowns intended to contain the coronavirus outbreak.
The Shanghai Futures Exchange's most-traded construction steel rebar contract, with May expiry, ended 2.1% higher at 3,460 yuan ($493.38) a tonne.
Hot-rolled steel coil, used in cars and home appliances, jumped 1.5% to 3,455 yuan a tonne.
"A number of measures have been intensified to stabilize the economy," analysts at Sino-Steel Futures Co Ltd in Beijing said in a note, citing moves by the State Council to reduce social insurance premiums and other measures to aid businesses.
Some of China's manufacturing hubs, meanwhile, are starting to loosen curbs on the movement of people and traffic, while local governments prod factories to restart production, following weeks of stoppages due to the outbreak.
A dramatic drop in new cases in China's Hubei province - the epicentre of the epidemic - also buoyed market sentiment.
"Helping sentiment is the track for COVID-19 cases with the number of new recoveries now exceeding the number of new cases and suggesting the virus may be close to peaking in China," said Tapas Strickland, director of economics at National Australia Bank in Sydney.
"China is also starting to ease up on containment measures," he wrote in a note.
Iron ore on the Dalian Commodity Exchange rose 4.2% to 667 yuan a tonne, extending its rally into the eighth straight session and wiping out losses suffered earlier this year. Iron ore on the Singapore Exchange was up 2.6% at $89.30 a tonne in afternoon trade.
Spot prices for benchmark 62% iron ore settled at $90.50 a tonne on Wednesday, slightly below its one-month peak of $91.50 hit on Tuesday, SteelHome consultancy data showed. Dalian coking coal gained 0.4% and Dalian coke advanced 1.5 percent.
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