Spot iron ore prices are slightly off the boil as we head into the Chinese New Year starting soon: With all the charts looking overextended and the restocking almost complete, of course its a perfect time to restart up once failing mines. From ABC: A surge in the price of iron ore could spark expansion
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.
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Spot iron ore prices lifted slightly as Dalian futures crumbled amid speculation there’s more controls ahead for iron ore traders: Is the top in just before Chinese New Year gets underway? Via Reuters: The strong rallies so far this year appear to owe more to sentiment than actual demand and supply fundamentals, which raises
Spot iron ore prices have come back sharply, with futures off nearly 4% while rebar prices stabilise: The brokers are rubbing their hands with anticipation that Rio Tinto is going to do some serious capital management. Read: lift dividends and do share buybacks to lift share prices and create more bonuses for executives instead of squirreling
Spot iron ore prices just zoomed past the September 2014 high with futures off the charts as well: These moves higher are in the face of lower imports, with data released yesterday via Mining.com: Trade figures released overnight showed China imported just under 89 million tonnes of iron ore in December, down 3.2% month on
Here’s the latest price update for the iron ore complex, where spot prices are steady but futures are going nuts: Dalian futures are poised to breakout here, which is good news for Rio Tinto, which just boosted its end of year exports. More from the AFR: Rio Tinto appears very likely to achieve its recently
The iron ore complex continues to build higher, especially on futures as $80 builds as the new support level for spot prices: More from Platts: Last year prices were bolstered by higher than anticipated Chinese demand and lower than expected supply growth from majors, as well as buoyant sentiment from firm steel and iron ore futures
The iron ore complex continues to scratch newer highs at the start of the year with spot prices again over $80USD per tonne, while Dalian six month futures are bunching up to a big breakout: More noises from the leaners in WA with former Commonwealth Bank chairman John Ralph pushing his weight around the WA
The iron ore complex begun the week much stronger with moves up across the board, but particularly futures as rebar just treaded water: http://www.theage.com.au/business/mining-and-resources/dalian-iron-ore-surges-8pc-shanghai-rebar-climbs-7pc-20170110-gtp602 So what’s moving this price higher and faster? (better? stronger?) Basically its speculative steel futures getting pushed around by official junctures to reduce capacity as huge smog problems and older mills
The iron ore complex begun the week much stronger with moves up across the board, but particularly futures as rebar just treaded water: All good news for the Budget bottom line, if this spectacular rally can hold, but according to the governments own forecasts, they contend a sub $50USD price for iron ore is coming. From
The iron ore complex slumped on Friday with the long and short end of the price market taking big falls, while rebar held steady: That looks like the start of a retracement of the recent speculative raly, so hold on to your hats coming into the Chinese New Year. Meanwhile, news that local iron ore extractors
Here is today’s iron ore price update with a big jump across the board (save rebar) after a malaise during the week: This is mainly due to the release of plans for another big infrastructure project in China – more from AFR: Non-ferrous metals from copper to aluminium rose after China unveiled late on
by Chris Becker Here are the latest iron ore and other commodity prices with stability in spot prices overshadowed by a lift in futures: The port inventory overhang is having a drag on spot prices, with low turnover on markets – more from Reuters: “The pullback results from the big amount of inventory, whereas the downstream
by Chris Becker Here are the latest iron ore and other commodity prices with the new year heralding a pullback: Port stocks hit a new record high as we noted yesterday and iron ore faces some bigger challenges this year, namely another supply surge. From Bloomberg: Seaborne supply is expected to remain strong on shipments
by Chris Becker Time to restart our daily iron ore price updates – and here’s where the complex stands coming into the new year as restocking reaches its zenith: The Qingdao ore price continues to go nuts but this furious rate of change could change abruptly, as stocks at Chinese ports have reached a new
From Macquarie: BHP and Vale have reached a non-binding agreement that will see Vale transfer the Timbopeba open pit mine to Samarco to provide a solution to tailings storage should production re-start. Samarco had historically stored tailings in its previously mined out Germano pit and is planning to use the southern part of the
Iron ore price charts for December 22,2016: The dream is over. Spot splatted though Tianjin benchmark is bit better -2.8% to $77.10. Paper fell more overnight and DCE looks ready to roll big. SGX is following. Steel fading. I have no idea why thermal is up but it’s not going to last. Coking is still
Chinese bonds are bid a little today: And Dalian is flat: Under the surface, trouble still lurks, via Bloomie: Here’s another Chinese financial practice that’s prompting high-decibel warnings. So-called entrusted bond holdings are a way for financial institutions to skirt rules on using borrowed money to invest in bonds. How? By getting a third party
From Macquarie: Sentiment towards China’s steel market remains strong, as shown by our latest proprietary China steel survey. Steel mills reported a continued increase in their order volumes thanks to strong demand from auto, machinery and infrastructure sectors. Their capacity utilisation rate remained stable despite better profit margins, most likely influenced by recent environmental-related
Iron ore charts for December 21, 2016: Spot down. DCE paper down overnight. Steel down. Coal still dead cat bouncing. It’s trying to deflate but given the array of headwinds it is painfully slow. Tianjin port is shut owing to smog. Some support is coming from Cyclone Yvette: But, even so, one wonders how much
From Macquarie: We are certainly in a sweet spot for commodity prices at present, and it’s a good time to be a resource producer. The world is positioning for a healthy period of global reflation in 2017, adding investor support to a demand perspective which continues to surprise on the upside. Meanwhile, a lack
From the World Steel Association: World crude steel production for the 66 countries reporting to the World Steel Association (worldsteel) was 132.4 million tonnes (Mt) in November 2016, 5.0% up on November 2015. China’s crude steel production for November 2016 was 66.3 Mt, an increase of 5.0% compared to November 2015. Elsewhere in Asia, Japan
Dalian has opened under pressure again: As Chinese bonds keep selling: And authorities are warning that liquidity will remain tight through the Q1 lending season: Tight liquidity in the interbank market is expected to continue until early February It recommends monetary authorities take steps to prevent the situation from getting worse Liquidity is forecast to get
Most of us were run down by China’s sudden swing to commodity-intensive growth in 2016. Are we about to see the reverse in 2017? From the WSJ: China’s central bank has guided short-term lending rates higher in order to squeeze out borrowers who are using the cheap money to make risky bets and loans. Last