MANILA: Dalian iron ore futures climbed more than 3% on Wednesday, while the Singapore benchmark price for the steelmaking ingredient extended gains, following the Chinese central bank’s move to inject additional liquidity into the banking system.

The People’s Bank of China (PBOC), as expected, boosted medium-term liquidity on Wednesday, with the operation resulting in a net 199 billion yuan ($29.16 billion) of fresh fund injection, while keeping the interest rate unchanged.

Markets had hoped the PBOC would pump more cash into the banking system after money conditions became unexpectedly tight at the start of February and to support the economic recovery after Beijing dismantled strict COVID-19 curbs.

The most-traded May iron ore on China’s Dalian Commodity Exchange rose up to 3.1% to hit 873 yuan ($127.92) a tonne in early trade.

On the Singapore Exchange, iron ore’s benchmark March contract jumped 1.5% to $124.30 a tonne. Steel benchmarks also rose on the Shanghai Futures Exchange, with rebar up 1.8%, while hot-rolled coil climbed 1.5%, wire rod added 1.1%, and stainless steel edged up 0.5%.

Other Dalian steelmaking inputs were also higher, with coking coal and coke up 2.3% and 1.5%, respectively. The liquidity boost in China, the world’s top steel producer, followed a record increase in new bank loans in January.

But analysts said ferrous commodities’ prices in China may remain range-bound as market fundamentals offer not much support at the moment, with iron ore port inventory in China hitting a five-month peak last week and the optimism around Chinese steel demand tempered by a subdued property market.

“Chinese demand is expected to be broadly flat with the weakness in China’s property market offset by a pick-up in infrastructure,” said Westpac senior economist Justin Smirk who expects iron ore prices to settle at $100 a tonne by yearend.