BEIJING: Chinese benchmark iron ore futures surged nearly 5% on Tuesday, extending gains into a second straight session and fuelling prices of steel products despite uncertainties driven by government intervention.

Spot prices of iron ore with 62% iron content for delivery to China jumped $6 to $140 a tonne on Monday from the previous session, according to data compiled by SteelHome consultancy.

“Iron ore is now caught between two opposing policies in China,” Commonwealth Bank of Australia commodity analyst Vivek Dhar said in a note, referring to regulatory stimulus to drive economic growth and price curbs for the steelmaking ingredient.

The country’s four biggest banks on Monday lowered mortgage rates in Guangzhou city by 20 basis points in a fresh move to support the property sector, according to people familiar with the matter.

Meanwhile, China’s finance minister vowed to implement bigger cuts in taxes and fees this year and strengthen coordination between fiscal and monetary policy.

The most-active iron ore futures on the Dalian Commodity Exchange, for May delivery, jumped 3.6% to 710 yuan ($111.97) a tonne as of 0238 GMT. They were up as much as 4.9% earlier.

“Policymakers are keen to limit inflation linked to higher iron ore prices. Their determination to keep iron ore prices in check is particularly strong given their belief that non-market forces like speculation are at play,” according to the CBA note.

Other steelmaking raw materials also gained, with coking coal futures increasing 3% to 2,667 yuan a tonne and coke prices up 2.7% at 3,430 yuan per tonne. Steel rebar on the Shanghai Futures Exchange leaped 1.3% to 4,850 yuan a tonne.

Hot rolled coils, used in cars and home appliances, rose 0.9% to 4,959 yuan per tonne. Shanghai stainless steel futures, for April delivery, inched 0.5% higher to 18,750 yuan a tonne.