Cost-led rally in metals despite weak demand

A SHARP SPIKE in coal and iron ore costs is rippling through the global metals chain, triggering a cost-led rally in aluminium and steel even as demand fundamentals remain weak, highlighting a widening disconnect between prices and underlying demand.

- SAURAV ANAND

At the heart of the current upcycle is a surge in mining-linked input costs. South African non-coking coal prices jumped 14% month-on-month (MoM) and 21% year-on-year (YoY), driven by higher freight rates and supply constraints, while Australian coking coal, despite a 8% MoM decline, remains elevated at 30% above year-ago levels, keeping cost pressures intact across the value chain.

According to a Centrum Institutional Research report, the ongoing price momentum across metals is largely cost-driven, with “pricing strong amid mixed cost trends,” even as global demand remains under pressure.