Iron Ore Bottom In? Prices Reclaim $100 On "Improving Downstream Conditions"
The short version
- Rafael Barcellos, head of Latin American metals and mining, pulp and paper equity research at Bradesco BBI, wrote in a note last week that the coal squeeze is helping support…
- Improving downstream conditions are, in turn, providing support for iron ore.
- Barcellos pointed to China's August manufacturing purchasing managers' index as another encouraging economic signal.
- Iron ore inventories also continued to decline, spot activity at Chinese steel-trading houses increased for a second consecutive week, and steelmaker margins improved.
- Blast furnace utilization, however, declined for a second week, tempering the recovery picture.
The story
Iron ore futures in Singapore surged above $100 a ton, the highest level since mid-July, as tightening Chinese coking coal supplies lifted steelmaking costs and early signs of improving seasonal demand supported prices across the steel supply chain.
Rafael Barcellos, head of Latin American metals and mining, pulp and paper equity research at Bradesco BBI, wrote in a note last week that the coal squeeze is helping support steel prices, with rebar and hot-rolled coil reaching multi-month highs. Improving downstream conditions are, in turn, providing support for iron ore.
Barcellos pointed to China's August manufacturing purchasing managers' index as another encouraging economic signal.
Iron ore inventories also continued to decline, spot activity at Chinese steel-trading houses increased for a second consecutive week, and steelmaker margins improved. Blast furnace utilization, however, declined for a second week, tempering the recovery picture.
Barcellos flagged a recovery:
Even so, the recovery we flagged in VALE: Calling the Iron Ore Bottom? Attractive Asymmetry After 2Q26 Results is now playing out, with prices largely rebounding from the lows of the past couple of weeks — a trend we expect to persist amid firm cost support and improving downstream conditions.
Barcellos' trade recommendation:
Against this backdrop, we continue to favor Vale and Ternium over CSN, Gerdau, and Usiminas.
China's prolonged property downturn has weakened a major source of steel demand, weighing on iron ore prices despite periodic rebounds.
The latest recovery to $100 a ton raises the question of whether improving seasonal conditions can translate into a sustained demand growth story, keeping prices in triple-digit territory.
In the metals complex on Monday, London copper futures reached a new high of $14,530 a ton. For further context, we direct readers to our note, "The Copper Chart Causing Alarm."
Professional subscribers can read much more about the latest metals space here on our new Marketdesk.ai portal.
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