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 price charts for April 26, 2017: Spot up. Futures down overnight. News flow is whacky: China’s steel futures climbed to their highest in 2-1/2 weeks on Wednesday amid unconfirmed market talk of production curbs in cities surrounding Beijing ahead of the New Silk Road summit in May. China typically orders industrial plants
Iron ore price charts for April 24-25, 2017: Spot fading though DCE paper rebounded overnight. 12 month coking coal futures are now pricing $127. Chinese port stocks sank 800kt last week but remain extreme. CISA steel output rose again in early April to huge new records. But inventories climbed as well when they should
Via Bloomberg: “We’re going from one world to another,” Peter Marcus, founder and managing partner of U.S. consultancy World Steel Dynamics, said in an interview in Shanghai. “We’re going to have mercantilism that’s going to promote domestic industries. The U.S. is going to win, and China is going to lose.” Prices in China could return
From Macquarie: Most recent survey result gives the short signal The most recent reading of the steel survey released by Macq’s commodities team shows a sharp deterioration in both sentiment and orders – sentiment dropped to 38 from 80 just two months ago, and the order index, while higher than sentiment, is below 50 which
After a few hopeful signs and idiotic fundies, iron ore has suddenly turned down in Dalian this afternoon: Coking coal too: Aforementioned fundie dunces are still bottom fishing though with Big Iron roughly flat: But if you want to a new level in iron ore dumb then cop this from JPM: Iron ore’s 32 per
From Macquarie today: Iron ore and Chinese steel prices have seen a long overdue tumble over the past few weeks, as the exuberance in pricing and demand expectations has begun its journey back to more fundamentally supported levels. As per any other classic pricing cycle, supply has responded to high prices and margin incentives
RIO is out with its first quarter production report and it is not good news for the iron ore price: Pilbara iron ore shipments were 76.7 million tonnes in the first quarter (100 per cent basis). Ship loading was impacted by cyclone activity during the period, and sections of the rail network were affected
Iron ore price charts for April 19, 2017: Spot rebounded. Paper and coking coal futures too. Steel not so much and that’s your clue to the future. Fundies are excited: “At these prices, we think the miners are looking demonstrably cheap,” said Garth Rossler, chief investment officer at Maple-Brown Abbott, who has been topping
Dalian iron ore and coking coal futures have recovered a little today: As has Big Iron after being flogged yesterday afternoon: But the chart damage is done. Indeed, BHP looks like it’s about to join RIO and FMG in the broken head and shoulders top club: We’re clearly already in oversold territory but I do
Via Macquarie: China released preliminary trade data for March. We saw strong imports for iron ore and coal, while copper imports continue to have negative growth due to a high base. Steel and Al exports remained low YoY, but we expect increases in coming months as the export arbitrage opens. Iron ore imports
Iron ore price charts for April 18, 2017: Tianjin benchmark crashed $3.10 to $61.50. Paper is still in free fall. Coking coal futures were put to the sword. Bloomberg reckons we’re near the bottom: Iron ore futures have fallen more than seven percent in the past two days despite encouraging data showing the economy in China,
Right on cue, the sell side downgrades to big miners have begun. Citi is out today with profit and price outlook cuts to FMG while Macquarie has cut WHC. Goldman is now forecasting an ongoing profit downgrade cycle: The end of the upgrade cycle. BHP, RIO and FMG have benefitted from a considerable earnings upgrade
FMG is out with its Q3 production report this morning and when it rains it pours: Fortescue has released its March 2017 quarterly production results, reporting shipments of 39.6 million tonnes of iron ore. Cash production costs (C1) were US$13.06 per wet metric tonne (wmt), a 12 per cent improvement over the prior comparable period