Iron Ore Turns ‘Very, Very Hot’ as Prices Jump 10% in Minutes


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© Bloomberg. A freight train carrying iron ore travels towards Port Hedland, Australia, on Tuesday, March 19, 2019. A two-day drive from the nearest big city, Perth, Port Hedland is the nexus of Australia’s iron-ore industry, the terminus of one of Australia’s longest private railways that hauls ore about 400 kilometers (250 miles) from the mines of BHP Group and Fortescue Metals Group Ltd. The line ran a record-breaking test train weighing almost 100,000 tons that was more than 7 kilometers long in 2001, and even normal trains haul up to 250 wagons of ore. Photographer: Ian Waldie/Bloomberg

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(Bloomberg) — Iron ore futures leaped higher as trading opened on Monday, extending a record run amid rampant Chinese demand and a wider surge in commodity prices as the global economy recovers.

Futures in Singapore jumped more than 10% to hit a fresh record high of $226 a ton. The steelmaking raw material is surging as strong demand from top buyer China leaves supplies stretched. Prices breached $200 for the first time only last week.

“This sector is very, very hot, and just when China’s steel demand impulse will ease is perhaps the biggest question of 2021,” Vivek Dhar, commodities analyst at Commonwealth Bank of Australia (OTC:), said in Bloomberg Television interview. “Supply is still not able to meet that strong demand.”

Iron ore is just one of a sweep of materials from to crops that have marched higher in recent months. Bloomberg’s gauge of spot commodity prices finished last week at its highest in nearly a decade. Copper also extended its record rally Monday, soaring to $10,500 a ton in early trade.

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Steel prices have jumped in China as heavy users like the construction and manufacturing sectors enjoy a busy period, as well as enjoying tailwinds from stimulus measures. Steelmakers in the rest of the world such as ArcelorMittal (NYSE:) SA are also enjoying a boom as markets bounce back from the pandemic.

“There is a chance that ex-China demand can come back to such an extent that we still see steel demand pick up globally and that will see iron ore demand remain at these elevated levels,” CBA’s Dhar said.

©2021 Bloomberg L.P.

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