Via FreightWaves: According to chief executive officer Birgitte Ringstad Vartdal, “Golden Ocean’s first-quarter results reflect a weaker market environment brought about by disruptions in the iron-ore trade.” She explained on the conference call with analysts, “Going into 2019, there was strong conviction in the market. Additional tons of iron ore were to come from Brazil
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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Iron ore prices for May 22, 2019: Everything ripped the roof off. Goldman says sell, at the FT: The combination of strong demand and weak supply has pushed prices up almost 40 per cent since January to a five-year high of $103 a tonne, according to a price assessment by S&P Global Platts. While that
Dalian iron ore still marching higher: Via Reuters: Steel mills have been operating at low inventory levels and only purchasing hand-to-mouth from ports due to high raw material prices. Market estimated that average iron ore stocks at mills have fallen to around 20 days of use, down from normal inventory levels of 30 days. Ore
Iron ore prices for May 21, 2019: Spot up. Paper up. Steel up. Vale down: Brazilian mining company Vale has suspended freight transport on a portion of its Vitoria-Minas railroad as a precautionary measure against the risk of a breach at the Sul Superior tailings dam, which is connected to the closed Gongo Soco iron
Iron ore prices for May 17, 2019: Be upstanding for the tone, something I thought we would never see again. Paper is still flying. Steel is stuck. Remember that this is the weakest seasonal period. Unless Brucutu comes back, H2 is going to see $120 as China keeps stimulating to offset the trade war.
Iron ore prices for May 14, 2019: Spot, paper and steel down. Just goes to show that if the trade war takes pre-eminence in the months ahead then the shock to the global economy, largely through crashing equities, will damage Chinese steel demand before any stimulus can offset it. Quite a tug-of-war we’ve got going
Iron ore prices for May 13, 2019: Spot down. Paper up. Steel down. The paper market is placing its stimulus bets after the trade deal collapsed. Spot was not interested but will likely follow in due course. MOAR credit hitting the supply crunch is a juicy prospect. Though if the broader market correction gets out of
Via Reuters: The NDRC last year had ordered local governments to help broker deals between zombie firms and their creditors, and to draw up restructuring plans by June 2019. Steel mills will also be encouraged to launch large-size scrap recycling and processing centres and to adopt electric-arc furnaces that only use scrap metals to make
Iron ore prices for May 8, 2019: Spot down. Paper down. Steel down. Trade war weighing. Also soft China trade data. Steel exports were decent 6.33mt but iron ore imports crashed to 80.7mt in April, though largely on supply problems. Port Hedland shipping rebounded rebounded in April to 42mt so May should look better
Iron ore prices for May 7, 2019: Spot soared. Paper flamed out overnight on trade war worries. All else is stable. Port stocks fell another 2.4mt last week and are free falling. CISA steel output is at its highest ever in mid-April, above 2mt per day. Via Reuters: The Brazilian miner on Monday said that
Via Reuters: Brazilian miner Vale SA said on Monday that a court had ordered it to halt operations at its Brucutu iron ore mining complex, reversing a lower court decision that had allowed the mines activities to resume. The company also said it expects its 2019 sales of iron ore and pellets to be at
Some nice data from Clyde Russell: Australia’s iron ore exports rebounded in April after being hit by a cyclone the prior month, but the surge in shipments wasn’t enough to offset declining volumes from Brazil in the wake of January’s tailings dam disaster. Australian exports were about 69.1 million tonnes in April, according to preliminary
Iron ore prices for April 26, 2019: Everything is petty stable for now. CISA steel output numbers for early April ripped higher. It will be interesting to see if they converge with last year headed into mid-year. Rebar inventories peaked higher this year in Q1 but are drawing down faster so there’s obviously still life
Iron ore price for April 25, 2019: Spot down. Paper down. Steel down. I believe the peak is in here as China’s southern rainy season builds and delivers the May/June bulks correction. Beyond that, there is reason to believe we’ll see further steady declines in average prices. Chinese demand is waning, via Bloomie: The top
Iron ore prices for April 22, 2019: Spot firm. 12 month futures sagged as supply is responding. Steel OK. Here’s the problem a year and more out, via Bloomie: Mining dealmaker Mick Davis has won permission to export iron-ore from a planned mine in West Africa, adding momentum to the industry veteran’s comeback. Davis, through
Iron ore prices for April 17, 2019: Spot spanked on Brucutu. Paper more. Steel solid. Port stocks are climbing, 149mt last week, suggesting no shortage or ore. We might see some price strength as mills restock a little longer but the clear risk now is more price falls moving into May/June which is a
Iron ore prices for April 16, 2019: Spot down. Paper easing. Steel too. The news is Brucutu, via Reuters: A Brazilian state court has authorized iron ore miner Vale SA to resume operations at the Brucutu mine, its largest in Minas Gerais state, according to a court document. Brucutu was shuttered in early February by
Via RIO this morning: Rio Tinto chief executive J-S Jacques said “Our iron ore business faced several challenges at the start of this year, particularly from tropical cyclones. As a result, and following the continuing assessment of damage at the port resulting from the cyclones and other minor disruptions, 2019 guidance for Pilbara shipments is
Via Bloomie: Since last year, the government has doubled down on this kind of “targeted” stimulus, emphasizing the role of consumption and the promotion of a long-standing shift toward services and higher-value manufacturing — and away from expensive mega-projects. …Overall though, the relative restraint of the new stimulus strategy should help slow a build up
Iron ore prices for April 11, 2019: Spot up. Paper calm. Steel up. CISA late March steel output fell sharply and is only up a little year on year. I’ve added a second line (in black) to show what underlying demand is like ex-reforms that shifted illegal scrap production into blast furnaces over the past