UPDATE 1-Iron ore rises as China property support counters COVID worries
Recasts, updates prices
By Enrico Dela Cruz
MANILA, Jan 6 (Reuters) - Iron ore prices rose on Friday on optimism around China's stepped-up policy support for the ailing domestic property sector, but persistent worries about local COVID-19 outbreaks kept the steelmaking ingredient on track for a weekly fall.
The most-traded May iron ore on China's Dalian Commodity Exchange DCIOcv1 ended daytime trade 1.9% higher at 855 yuan ($124.72) a tonne.
But with the first week of 2023 dominated by about surging COVID infections in top steel producer China, the benchmark Dalian contract is down 1.3% for the week so far.
On the Singapore Exchange, benchmark February iron ore SZZFG3 was up 1.9% at $117.30 a tonne, as of 0755 GMT.
China is planning to relax restrictions on borrowing for property developers, Bloomberg News reported on Friday.
On Thursday, Chinese regulators said they had established a dynamic adjustment mechanism on for first-time home buyers.
Rebar SRBcv1 and hot-rolled coil SHHCcv1 on the Shanghai Futures Exchange both rose 2.7%, wire rod SWRcv1 gained 2% and stainless steel SHSScv1 climbed 0.2%.
Other Dalian steelmaking inputs also rose, with coking coal DJMcv1 and coke DCJcv1 up 1.9% and 2.8%, respectively, as remain despite China's move to resume .
But weak market fundamentals, combined with a challenging macroeconomic environment due to COVID outbreaks, will likely keep prices volatile ahead of China's week-long Spring Festival celebration from Jan. 21, and even beyond, analysts said.
Industrial and construction activities in China usually grind to a halt during winter and holiday breaks.
"In the -term, a potential 'super spike' in COVID-19 infections could prompt a sharp downturn," HSBC economists said in a , anticipating heightened caution among China's citizens even as pandemic control measures are being relaxed.
"By the second quarter of 2023, pent-up consumer demand should drive a strong recovery, lifting mainland China's economy more broadly," they said.
(Reporting by Enrico Dela Cruz in Manila; editing by Uttaresh.V and Subhranshu Sahu)