SINGAPORE — Iron ore futures climbed above $100 a ton, the highest level since mid-July, as tightening Chinese coking coal supplies pushed steelmaking costs higher while early seasonal demand improved.
Coking coal shortages have lifted steel prices across the supply chain. Rebar and hot-rolled coil reached multi-month highs, according to Rafael Barcellos, head of Latin American metals and mining equity research at Bradesco BBI.
Downstream conditions are supporting iron ore directly. China's August manufacturing PMI, while not yet robust, signaled stabilization. Spot trading activity among Chinese steel-trading houses increased for a second consecutive week, and steelmaker margins improved.
Inventories of iron ore continued to decline. However, blast furnace utilization fell for a second straight week, a cautionary signal that constrains the bull case.
Barcellos said the recovery Bradesco BBI had anticipated is unfolding, with prices rebounding from recent lows. He expects the trend to persist, underpinned by firm cost structures and better downstream demand.
Bradesco BBI favors Vale and Ternium over CSN, Gerdau and Usiminas based on current valuations.
China's property market downturn remains a structural headwind on steel demand. The rally to $100 raises whether seasonal improvements can sustain prices in triple-digit territory or whether weakness returns once seasonal tailwinds fade.
London copper futures reached $14,530 a ton Monday, signaling that industrial commodity demand pressures remain broad-based across the metals complex.
