MANILA: Dalian and Singapore iron ore futures touched two-week highs on Tuesday, extending a rally driven by hopes that top steel producer China’s support for its struggling property sector would help boost demand for the steelmaking ingredient.

The most-traded iron ore, for September delivery, on China’s Dalian Commodity Exchange ended morning trade 4.1% higher at 738 yuan ($109.28) a tonne, after hitting its highest since July 11 at 746 yuan earlier in the session.

On the Singapore Exchange, iron ore’s front-month August contract climbed 4% to $109.60 a tonne, its strongest since July 12. Sentiment has improved following reports that China will launch a real estate fund to help property developers cope with a crippling debt crisis and restore confidence in the industry.

Dalian iron ore prices have rebounded about 15% from a seven-month low hit on July 20, while SGX iron ore has risen 14% from an eight-month low of $95.50 a tonne touched on July 18, when news of mortgage-payment boycott on unfinished houses rattled investors. The fund to help distressed property developers adds to the list of measures taken by Chinese policymakers to ease some of the credit access issues facing real estate companies.

But uncertainty remains whether iron ore’s gains could be sustained. “In our view, credit access doesn’t fundamentally solve the underlying problem of weak property sales”, which were hit by COVID-19 restrictions during the first half of the year, said Commonwealth Bank of Australia commodity analyst Vivek Dhar.

“A meaningful relaxation of China’s COVID zero policy appears the most likely pathway to instil confidence back into China’s property sector,” he said.