Iron ore is surging thanks to its bulk-commodity compatriot, coal. Iron ore futures in Singapore advanced to the highest level in two weeks and contracts in China went limit-up as coal’s rally pulled steel and other raw materials in the supply chain higher.
In Singapore, SGX AsiaClear futures for December gained as much as 3.1 percent to $58.05 a metric ton, the highest since Oct. 5, while iron ore for January delivery surged 3.9 percent to 471.5 yuan ($69.58) on the Dalian Commodity Exchange. On Monday, the spot price for 62 percent content ore added 1 percent to $59.28 a dry ton, according to Metal Bulletin Ltd.
“Iron ore alone can’t make steel, it needs the help of coking coal,” Dang Man, an analyst at brokerage Maike Futures Co. in Xi’an, China, said by phone. “The shortage in coal supply right now seems unlikely to improve before year-end. That’s driving steel prices and production higher, benefiting iron ore too.”
After three years of slumping prices as mine supply rose and China slowed, iron ore has gained 36 percent in 2016 as Asia’s top economy boosted stimulus. Steelmakers in the country that produces half of world output have fired up plants after stronger demand boosted prices and expanded profit margins. Coal prices have soared in 2016 on tight supplies, and HSBC Holdings Plc has said the surge in coking coal will probably keep global steel prices elevated.
Prices of hot-rolled coil climbed as much as 2.9 percent to 2,888 yuan a ton on the Shanghai Futures Exchange, the highest since August on an intraday basis. Coking coal futures in Dalian jumped as much as 3.7 percent to a record, while coke rose 4.3 percent
SOurce:Bloomberg