Daily iron ore price update

Find above today’s iron ore complex table. Here are the charts. Spot and 12 month swap:

The spread between them is running out of room for this price level:

If you think about it, the spread makes a fair amount of sense. Current iron ore demand is boosted by restocking and Chinese leadership transition hopes. Future pricing is tagging fundamentals.

Still, current conditions are getting little support from higher steel prices:

And remember, this is despite steel production showing a huge leap in Fridays’ industrial production figures. Whatever the overhang, it is large.

No hope either in China’s coastal bulk shipping indexes:

But the capesize index of the Baltic Dry has turned around:

My hope last week that Indian news may be enough to send iron a leg higher is looking forlorn. There is perhaps enough room for a brief run at $125 but I’d be unsurprised to see a smooth Chinese leadership transition trigger a slump.

Houses and Holes

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.

He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.

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  1. How much longer until the red line and brown line snap back together?

    I can’t see anywhere in the chart where the red line has gradually climbed up to meet the brown line.

      • Yeah but when they’ve moved apart for long periods they’ve been moving in the same direction. When they’ve diverged in different directions in the past they’ve snapped back after a relatively short time (see Nov 11).

        Do you have a longer term chart going back to pre-crisis prices?