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 stee
