Daily iron ore price update (Suck it up, Sunshine)

Iron ore prices for December 11, 2020:

Spot up again. Paper as well. Steel has not updated. Records are tumbling. As iron ore roars higher:

It is only $7 below its all-time AUD high:

As Dalain futures hit their all-time high:

China is not happy, whinging like a stuck pig:

China’s steel industry body has demanded an explanation from Anglo-Australian miner BHP about the surging cost of iron ore, in a fresh sign of Beijing’s growing frustration about runaway prices for the steelmaking ingredient.

The China Iron & Steel Association (CISA) held a video conference on Thursday with BHP executives in which there was a “candid exchange of views” on the miner’s production, sales and pricing, according to a statement from the industry group.

Luo Tiejun, a CISA vice-president and a former official at the Ministry of Industry and Information Technology, questioned the company about the single day price rise of US$7.5 per tonne on the Platts 62 per cent iron ore index last Friday.

The company agreed to enhance communication with the association to ensure “an open and transparent iron ore market”, according to the briefing, which was attended by BHP’s vice-president of marketing and sales, Rod Dukino, and head of sales for iron ore Rohan Roberts.

BHP was quoted as saying production for the financial year that started in July would be robust and reach the high end of its planned 276 million to 286 million tonnes. It added its shipping plan has not been affected by weather.

The firm, which is headquartered in Melbourne, did not issue a statement after the meeting or immediately reply to enquiries.

And more:

China’s steel producers have called on the market regulator and securities regulator to investigate a recent jump in iron ore prices and crackdown on any possible wrongoing, an industry group said on Friday.

While steel demand has surged in China as the economy quickly recovers from the coronavirus crisis, the industry group and traders say there are signs that speculators are now jumping in and adding fuel to the rally.IRONORE/

“Current surging iron ore prices have deviated from the supply and demand fundamentals, largely exceeded mills’ expectations and there’s obvious signs of capital speculation,” the China Iron and Steel Association (CISA) said in a statement, citing major steel producers at a symposium on Thursday afternoon.

That’s what happens when you threaten supply with a trade war.

Some good news for the fascists:

Brazilian miner Samarco is planning to restart operations in late December, the company said on Friday, five years after a dam burst killed 19 people and resulted in Brazil’s worst ever environmental disaster.

The company initially expects to operate at 26% of capacity, which is 30.5 million tonnes of iron ore pellets annually, it said in a separate statement given to Reuters.

I still expect us to top $200 here. Why not? Demand is good. Port stocks have stopped rising and they will have to go much higher yet. La Nina is here. Supply is tight and Beijing’s threats make it uncertain.

Suck it up, Sunshine.

David Llewellyn-Smith
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Comments

  1. I’d say I almost feel sorry for the Chinese, but that would be hypocritical of me. I don’t…

    $109bn in exports in 12 months to November, at $158.5bn over 12 months with 2.2% volume increase I see value of $187.7 next year. Even if prices fall to $100/MT by year end next year, that’s still $152bn.

    Massive…

    • That should read $158.5/MT, not $158.5bn… but the picture is clear. It’s about 2pp of GDP (and rising) in terms of nominal stimulus

  2. adelaide_economistMEMBER

    So selling cheap product (so-called ‘dumping’, something China should be very familiar with given their behaviour) is reason for the CCP to rage, but so is selling it at premium prices? Go figure. It’s almost like they are a raging out-of-control dictatorship with very little grip on reality.

    • More like a five year old sitting in the middle of a supermarket isle screaming and crying that they want “that” packet of lollies.

  3. If they want the price of iron ore to go back down they could just stop buying it. They already have a huge oversupply of empty sky kennels. I am sure the Chinese could misallocate their labour into something else for a while, like some cheap Chinese plastic aircraft carriers. Just take one of the designs they stole off Airfix and scale it back up to full size!

  4. TailorTrashMEMBER

    Would be interesting to know how much of that
    $200 ends up in the Australian economy…as wages ,dividends ,Capital expenditures or taxes and royalties (less the bit Gina gets ) I’m sure someone on MB could have a stab at that

  5. Economic and Trade booms keep falling into Australians laps – yet has the average Australian seen any of it? Nope, the majority of the export income has instead been used to import more people and grow domestic consumption, to allow our trading and financial elites to perform the alchemy that transmutes OUR Iron or into THEIR property wealth and profits.

    It will be interesting to see what happens this time with constrained immigration – how high will the AUD go if Iron Ore keeps climbing? Is $250 possible? One thing is for sure, Scomo will make sure that the tax dollars gushing from the Iron Ore fire hose, will be spraying every and which way, prior to the early election.

        • Complacency is what it is called. We’re literally the that spoilt brat child that everyone knows is going to end up losing the family fortune because they been so fortunate for so long.

        • Those with incidental exposure to property, mainly the Boomer class, have been quite dumb happy with the status quo. Mistaking their dumb luck as passive participates in the great rip-off of our social capital, as their own financial genius and hard work.

          Everyone else has been too busy chasing their tail meeting the mortgage and putting food on the table to notice the lack of progress, the few that have noticed dare not speak out aloud least they risk being replaced by cheaper imported substitutes.

  6. “China’s steel industry body has demanded an explanation from Anglo-Australian miner BHP about the surging cost of iron ore, in a fresh sign of Beijing’s growing frustration about runaway prices for the steelmaking ingredient.”
    “BHP was quoted as saying production for the financial year that started in July would be robust and reach the high end of its planned 276 million to 286 million tonnes. It added its shipping plan has not been affected by weather.”
    But FMG is not queried? nor RIO? I guess these two are at capacity constraints?
    And BHP are not, having purportedly capacity in excess of 330mt.
    And mebbe the samarco recovery is on a go slow coz BHP sez
    But hey cisa when you got in the way of BHP’s 3.3 shares to 1 RIO bid, did you not think BHP would flip you the bird when the chance arrived?

  7. Higher the price… higher the tariffs… higher prices feed the coming Chinese narrative; it’s actually a trap.

    Just remember who is actually setting these prices, the Chinese, most of whom are SOE’s!