(Bloomberg) — A surge in demand in China, the world’s key growth engine, risks a shortage of iron ore that’s pushed prices past $150 a ton and crowned it this year’s best-performing major commodity.
Futures in Singapore have surged almost 70% this year, hitting their highest since trading started in 2013, as China’s stimulus-led rebound fuels steel output and consumption.
The rally received an added boost from Vale SA’s cut to annual production guidance last week, while the first quarter is likely to bring elevated risks of weather disruptions for southern hemisphere producers.
At the heart of the rally is China’s position as the only major economy to see a sustained and robust rebound from a pandemic-driven slump this year, with investment in infrastructure a key pillar of growth.
That’s boosting steel demand, buoying prices of the alloy and encouraging the top steelmaker to increase output even as input costs rise.
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