Iron ore price, steel price and futures published daily
The contemporary seaborne iron ore price first emerged in 2003 when the Chinese development model shifted up a gear. Indian suppliers broke free of an annual contract pricing system that had been dominated by Australia, Brazil and Japan for decades.
As Chinese demand surged, traditional supply and pricing mechanisms could not keep pace. Indian miners in Goa and Karnataka had surplus supply and filled China’s marginal new needs outside the old benchmarking system.
But it still wasn’t enough and other non-traditional suppliers began to emerge in South America and Africa. These needed more dynamic pricing mechanisms and by 2008 Platts, Metal Bulletin and The Steel Index were publishing a daily iron ore price.
As the Chinese demand surge continued, by 2007, major Australian iron ore miners were charging enormous premiums to prices from five years earlier. The annual benchmarking system began to strain to the point breaking, including significant diplomatic tensions between Australia and China. This culminated in a proposed merger of BHP and RIO Tinto which triggered panic in Beijing as it feared an already supply-constrained market and soaring iron ore price would by made worse by monopoly pricing. The Chinese SOE, Chinalco, moved the buy a blocking stake in RIO Tinto.
However, the GFC intervened and deflated tensions as Chinese demand collapsed. But Chinese steel mills found themselves still tied to very high prices and an annual iron ore price benchmark that did not reflect the new reality. Many defaulted on cargoes and walked away from deals.
To fight the downturn, China unleashed an enormous fiscal and monetary stimulus that soon had China building more than ever. The demand for iron ore rocketed to all new highs. With the memory of contract defaults fresh in their minds, major Australian miners, led by BHP and CEO Marius Kloppers, abandoned the annual benchmarks, forcing Chinese steel mills to adopt a short term iron ore price using spot and quarterly contracts. Brazil joined in in 2010.
The spot iron ore price soared to all new highs and triggered a global wave of new supply from producers such as Fortescue Metals Group, Ferrexpo, Kumba Iron Ore, Anglo American and Sino Iron.
With the rise of the short term iron ore price market, iron ore derivative markets grew. First in the Singapore on the SGX and later in China as the Dalian Commodities Exchange and the United States at Chicago Commodities Exchange (CME). Iron ore derivatives could hedge and future price iron ore output.
These last developments coincided with the peak in the China boom and prices began to fall from 2012. After peaking above $190 per tonne, the iron ore price collapsed into the $30s in 2015 as new supply outstripped demand.
Ahead were still many years of oversupply, a lower iron ore price, consolidation and mine closures.
Find below our daily feed of market analysis.
You’ve got to love the way the national conversation transpires around resources some days. Take Adani at The Australian today: A highly orchestrated, secretly foreign-funded group of Australian environmental activists opposing the $16 billion Adani coalmine in Queensland has “dampened” Indian investment interest in Australia and received heated criticism from the federal Coalition and Queensland Labor
Iron ore price for October 21, 2015: Tianjin benchmark was unchanged at $58.40. Paper was stable overnight. Rebar peaked. Chinese port inventories added 1mt last week and is right at year highs of 105.8mt. The last point is the key to recent strong prices. In the past three weeks ports have added 1mt per week,
The yuan is sinking to new lows again today as the US dollar charges on: Nobody cares for now with sentiment for the inflation trade still high. But make no mistake, the falling yuan is massively deflationary, not least for bulk commodities and, soon enough we’ll all see it. Dalian has opened flat. BHP is
Reuters is reporting some strange comments from our Nev: Skyrocketing prices for coal used in steelmaking could deliver higher profits to Australian iron ore miner Fortescue Metals Group, its chief executive officer said on Thursday. Prices for coking coal have more than doubled this year to above $230 a tonne, while iron ore, the other
Some good news here, from World Steel: World crude steel production for the 66 countries reporting to the World Steel Association (worldsteel) was 132.9 million tonnes (Mt) in September 2016, 2.0% up on September 2015. In the first nine months of 2016, Asia produced 825.9 Mt of crude steel, an increase of 0.6% over the
Iron ore charts for October 20, 2016: Tianjin benchmark added 0.7% to $58.40. Paper soft. Rebar firm. Coal soft. I’ll punt and say thermal has peaked. In news, Vale is desperately trying to hide its elephant, from Reuters: Brazilian miner Vale SA trimmed its forecast for iron ore output in 2017 on Thursday, as the
Fortescue is out with its September production report and it’s very solid again: Fortescue has released its September 2016 quarterly production results, reporting shipments of 43.8 million tonnes of iron ore consistent with guidance and prior performance. Cash production costs (C1) improved to US$13.55 per wet metric tonne (wmt), a reduction of five per cent
No doubt about the shift in RIO strategy: Rio Tinto chief executive J-S Jacques said “We have delivered strong quarterly production, underpinned by improving operational performance across our Tier 1 portfolio. Output from our iron ore and bauxite assets reflects the drive for productivity and operational excellence. With a continued focus on value, we will
In the bullish corner, we have Macquarie Bank: The global IP recovery is continuing post its December 2015 nadir of +0.4% YoY, with the latest reading being +2.0% YoY in August 2016. Please see the 12 October 2016 Commodities Comment. Our 2017 forecast is +2.4%. This drives a mild acceleration in global real GDP growth through
Iron ore charts for October 19, 2016: Tianjin benchmark was unchanged at $58. Paper was up again overnight. Rebar keeps on keeping on. Coking coal too though thermal flamed out. No change to my outlook. Yesterday’s steel output data from the NBS gave us another record September at 68.2mt: We’re now up 0.4% year to
From the alleged Big Tax Dodger: BHP Billiton Chief Executive Officer, Andrew Mackenzie, said: “Full year production and unit cost guidance remains unchanged. Safety and productivity continue to improve with our new operating model helping us identify and replicate best practice more quickly. “We have seen early signs of markets rebalancing. Fundamentals suggest both oil and
Iron ore charts for October 18, 2016 Do not adjust your television sets. Bulk commodites are in a full blown melt-up. Despite solid falls in Dalian yesterday, Tianjin benchmark rose 0.3% to $58. Paper then hit news highs overnight. Rebar is trailing in the wake. Coal is driving it all now and has entered a complete
Hooray for Brendan Grylls: This morning, Mr Grylls took aim at two key arguments against the policy — that the 1960s State agreements containing the production rental could only be changed with the agreement of the companies, and that State owed the miners goodwill for investing in the Pilbara. Mr Grylls told the audience he
From Macquarie: The Chinese property cycle is starting to turn, mid-17 headwinds on the way A key part of the 2016 recovery in metals demand has been the relative strength in the Chinese property market contributing to a more commodity-friendly growth environment. However, all good things much come to an end, and as per
Iron ore charts for October 17, 2016: Tianjin benchmark added 1.8% to $57.80. Paper finally flamed out last night falling -3%. Rebar took off, showing that for now mills can pass on some costs to what must still be decent demand. Reuters has texture: A big rally in steelmaking raw materials including coking coal and
Remember that volume spikes that we saw in Dalian iron ore futures from February through April that drove prices wild? Well, have a look at it now, from Deutsche Bank: No wonder Dalian been increasingly over-excited versus physical markets. I am having trouble believing these volume and open interest spikes! Here’s the problem, from Platts: Focusing
From The Telepgraph: The future of BHP Billiton’s Samarco iron ore mine in Brazil has been thrown into doubt after the mining giant admitted for the first time that it cannot guarantee that it will be reopened. BHP, which co-owns Samarco with Brazilian mining giant Vale, is expected to face uncomfortable questions about the disaster
Iron ore price charts for October 16, 2017: Tianjin benchmark rose 0.4% to $56.80, again under-performing paper which went nuts Friday night. Steel is stalled. Chinese iron ore port inventories rose 300kt over the past two weeks. That stability helps explain some of the returned price pressure: Yet it cannot last. The coal craziness continues to
From Bill Evans at Westpac: Over the course of the last month, the Australian dollar has traded up from USD0.745 to USD0.77 and now back to around USD0.755. Despite this usual volatility we have remained comfortable with our target levels of USD0.74 by year’s end, then falling to USD0.68 by end 2017. As usual, our
From Macquarie: Australia’s Bureau of Meteorology has forecast a 67% chance of having more than the average 11 tropical cyclones over the 2016/17 season from November to April due to the prevailing weak La Niña conditions in the tropical Pacific Ocean. In terms of the geographic split, Western Australia is expected to have at least