(Bloomberg) — Iron ore’s stunning surge won’t fade anytime soon because buyers remain nervous about being caught short as global demand accelerates amid lingering supply threats, according to a veteran commodities trader.The steelmaking material soared past $230 a ton Wednesday to a fresh record for Singapore futures, 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 Ltd.“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 Plc, 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 12-18 months, according to Oversea-Chinese Banking Corp.China’s steel and iron ore futures also jumped to record highs Wednesday. The nation’s steelmakers are ramping up production in defiance of government attempts to rein in output to control the industry’s carbon emissions, while robust profit margins are enabling mills to better accommodate surging input costs.Amazing MotivatorIron ore is “grossly overpriced at the moment, but fear is an amazing motivator and prices are a reflection of fear,” Glass said. “You’re seeing fear more broadly with gold prices up, the dollar down, there is a flight to safety, and there is a certain amount of fear feeding into commodities markets.”China relies on just two countries — Brazil and Australia — for 80% of its iron ore imports. Brazil is grappling with a deadly surge of the coronavirus, and there are global concerns about the Covid-19 variant that’s overwhelming India. Separately, China’s fraying ties with Australia have added another element of risk to the market.“From Brazil, those boats are 40 days away,” Glass said. “So any more problems in Brazil because of the virus, you better make sure you are well-covered. And if politics between Australia and China does get to the point of creating a problem with Australian supply, and there is a Brazil issue too, then security of supply becomes very, very important.”Iron ore in Singapore rose as much as 5.7% to reach a record $233.55 a ton and traded at $232.20 at 2:25 p.m. local time. Iron ore on China’s Dalian exchange and steel rebar in Shanghai also both advanced to fresh all-time highs.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.