MANILA: Iron ore futures retreated on Friday as China indicated controlling COVID-19 outbreaks was still a priority, although the steelmaking ingredient stayed on track for its steepest weekly rise since March.

Iron ore’s most-traded September contract on the Singapore Exchange was down 3.7% at $114.30 a tonne, as of 0727 GMT, after touching its highest since June 30 at $119.90 in the previous session.

On China’s Dalian Commodity Exchange, September iron ore ended daytime trade 1.8% higher at 782 yuan ($116.11) a tonne, off Thursday’s four-week peak of 798.50 yuan.

China is sticking to its “dynamic zero- Covid “ policy, state media said after a high-level meeting of the ruling Communist Party on Thursday. “It appears to us that any change in the zero-Covid policy will only happen when authorities are convinced that mutations are less virulent and vaccines/medicines are proven to be more effective. Both are unlikely to happen in the near term,” ANZ analysts said in a note.

Iron ore and steel markets suffered losses in the second quarter as Covid -19 lockdowns in China dampened demand in the world’s biggest steel producer and consumer. But iron ore rebounded this week, with the benchmark 62%-grade material gaining about 15% in the spot market as of Thursday in response to widening steel margins and optimism about demand prospects in coming months.

Chinese steel demand in July-December is likely to rise by as much as 3% over first-half volume, industry news provider Mysteel quoted Luo Tiejun, vice chairman of the China Iron & Steel Association, as saying at a business conference on Thursday.

Rebar on the Shanghai Futures Exchange rose 0.6%, extending gains to a third day,

while hot-rolled coil climbed 0.7%. Stainless steel advanced 1.4%. Other steelmaking ingredients traded higher, with Dalian coking coal up 3.3% and coke rising 2.4%.