The steelmaking material forged new all-time highs this week, soaring past $220 a ton amid a broadening commodities boom. While steel demand and production are strengthening, many analysts argue market fundamentals alone don’t justify such high prices. That won’t halt further gains, according to Andrew Glass, Singapore-based founder of Avatar Commodities.
“Logic dictates that these are ridiculous prices but fear will continue to keep the scramble going,” said Glass, a former head of ferrous trading at mining major Anglo American, who has traded commodities since the 1990s. “There is fear of not being able to secure the logistics and the resources you need -- $220 is expensive, but it’s much more expensive if you have to shut down a mill because you can’t get material.”
Industrial commodities and shipping costs are spiking as buyers hurry to secure raw materials with global industries from manufacturing to construction gearing up again as the pandemic fades. That adds to strong demand from China, where elevated steel margins are providing support for high iron ore prices. They could test $250 in the coming 12 to 18 months, according to Oversea-Chinese Banking Corp.
