Fairfax and News are both guilty of regular iron ore market blunders. News publishes the correct price, the Tianjin benchmark, every day but it constantly says this:
The iron ore price has edged lower, falling back towards the key $US55 a tonne threshold as the market digests the supply signals from a string of production reports last week.
Iron ore slipped 0.7 per cent to $US55.70 a tonne in the most recent session, according to The Steel Index, from $US56.10 the previous day.
Meanwhile iron ore delivered to the port of Qingdao dropped a sharper 2.3 per cent to $US55.87.
The commodity has now managed to hold above the federal budget estimate of $US55 for nearly three weeks, after spending several weeks post-budget languishing below the official forecast.
The Tianjin price is CFR, which means it includes freight costs. Freight is currently around $5 per tonne (and has ranged from $3-$8 depending upon oil). The Budget price is FOB which means it does not include freight costs. Thus the current Budget outlook price of FOB $55 is actually CFR $60 when converted to benchmark iron ore spot (that is, when you add freight). So today’s price of $55.70 is actually $4.30 below the Budget forecast:
Fairfax is constantly making the same blunder and, worse, it does not even use the Tianjin benchmark price in its daily citations. It always quotes the Qingdao price which tracks Tianjin but often diverges day-to-day:
Volatility in the spot iron ore price continued on Friday, this time to the downside.
After snapping a six session losing streak on Thursday, jumping more than 2.5%, that gain was almost entirely reversed on Friday with the spot price for benchmark 62% fines tumbling 2.27% to $55.87, according to Metal Bulletin.
Metal Bulletin is NOT benchmark.
Such tawdry reporting would not matter except for the small fact that the Australian economy is iron ore.
