The most-traded September iron ore contract on China's Dalian Commodity Exchange DCIOcv1 traded 2.49% higher at 823 yuan ($114.72) a metric ton.
The benchmark August iron ore SZZFQ5 on the Singapore Exchange was 1.61% higher at $105.15 a ton, as of 0745 GMT.
"Iron ore futures extended recent gains amid prospects of additional stimulus measures, with Beijing's announcement of the $170-billion hydropower project promising to deliver a positive economic boost for steel," ANZ analysts said in a note.
The move has also sparked optimism that the government may be reverting to traditional fiscal stimulus strategies to bolster economic growth, ANZ said, with positive sentiment further supported by ongoing efforts to reduce excessive competition and overcapacity in the steel industry.
The Chinese government's continued efforts to curb "involution-style" competition among industrial enterprises reinforced market optimism, said consultancy Mysteel.
