Iron ore has climbed above the $100-per-ton threshold for the first time in seven weeks, buoyed by trader unwinding of bullish coking coal bets alongside expectations of pre-holiday stockpiling by Chinese steel mills and elevated freight rates.

Iron ore futures on the Singapore market advanced as much as 1.6% to $101.10 per ton, marking the strongest intraday level since July 2. For most of the summer, the commodity languished below the psychologically significant $100 level on typically weak seasonal steel demand during the warmer months. Yuan-denominated iron ore futures in China also gained as much as 1.8% during the session.

Pranay Shukla, global head of dry bulk shipping and commodities research at S&P Global, noted that the upswing is largely powered by position unwinding. Market participants who previously executed a strategy favoring long coking coal positions against short iron ore exposure are now reversing those trades, which is generating buying pressure and creating an upward trend in iron ore prices.

Fundamental factors are lending additional strength. Sentiment has turned increasingly optimistic regarding steel producers replenishing iron ore inventories, reinforced by expectations of a seasonal rebound in construction activity during September. Furthermore, London dry bulk freight rates surged to their highest level in nearly five years on Friday.

Iron ore ultimately settled 1.1% higher at $100.60 per ton. Dalian-listed iron ore futures advanced 1.3%, while Chinese coking coal futures, which had recently enjoyed gains, fell 3%. Other industrial metals showed mixed performance on the London Metal Exchange.