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This article first appeared on GuruFocus.

Market participants are positioning for further potential upside in iron ore prices as a year-end rally across metals gathers momentum and attention turns to policy signals from Beijing. Iron ore futures have advanced for three consecutive sessions in Singapore, climbing nearly 1.8% intraday to as much as $106.55 a ton, putting prices on track for their highest close since late November. In China, contracts on the Dalian Commodity Exchange rose for a second day, gaining as much as 2.6%, the largest intraday increase since Sept. 9. The move has unfolded alongside strength across the metals complex, with copper reaching an all-time high and silver pushing past $80 an ounce, reinforcing a constructive backdrop into the end of the year.

Sentiment has also been supported by fresh policy guidance from Chinese authorities. The National Development and Reform Commission said it would deepen supply-side reforms in steel, petrochemicals and related sectors as part of the 15th Five-Year Plan from 2026, including expanding high-end production, prohibiting unauthorized capacity additions, and using market mechanisms to encourage consolidation. In parallel, the Ministry of Finance said after a year-end policy meeting that China will expand government spending and improve how it deploys capital in 2026. Taken together, these signals are being interpreted by markets as potentially supportive for resource-based industries, even though the details remain medium-term in nature.

That optimism has emerged despite softer near-term fundamentals. Iron ore inventories at Chinese ports rose for a 10th time in 11 weeks to the highest level in more than a year, according to Shanghai SteelHome E-Commerce, underscoring that the latest price move is being driven more by futures sentiment than by a clear recovery in physical demand. Prices have nevertheless shown resilience in recent months, helped in part by restrictions on some supplies from BHP Group (NYSE:BHP) imposed by China’s state-backed iron ore trader, even as steel demand in China has softened. By mid-afternoon in Singapore, iron ore futures were up 1.4% at $106.15 a ton, with yuan-priced contracts in Dalian and steel contracts in Shanghai also posting gains.