Iron ore price

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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Daily iron ore price update (already priced)

Spot flat. Paper flat. Steel flat. Chinese stimulus is already priced. In news, Vale wants more, via Reuters: Peter Poppinga, executive director at Vale, said at an industry conference in China that the world’s largest iron ore miner was studying expanding its S11D project in the Amazonian state of Para, even though it was still


Daily iron ore price update (here it comes)

Iron ore prices for September 19, 2018: Spot down. Paper more. Steel up. Here it comes, via Reuters: The National Development and Reform Commission (NDRC), the top state planner in the country, said in a news briefing on Tuesday that China would ramp up investment in infrastructure, as well as in agriculture, poverty alleviation and


Steel pulverised as China mulls flexible shutdowns

Via Reuters: Prices of steel and its raw materials fell sharply in China for a second session on Wednesday, hitting multi-week lows, as more investors liquidated positions with oversupply risks rising as Beijing mulls a flexible implementation of its output curbs. China is considering allowing its northern provinces to decide individual output cuts by heavy


S&P warns on iron ore outlook

Via S&P: Our price assumptions for iron ore are unchanged. In our view, favorable steel producer margins and supply side reform in China should underpin steady demand for iron ore this year. This demand, together with disciplined new iron ore supply from major players, should support a relatively stable iron ore price for the rest


Daily iron ore price update (scraptastrophe!)

Iron ore prices for August 30, 2018: Spot flat. Paper jumped overnight but before Trump’s big bash. Steel has flamed out. The truth is out at Macquarie: The bank tracks Chinese imports via customs data and shipping information from exporters, and so far in 2018, iron ore imports appear to be flat year-on-year. That’s despite


Banana Man abandons iron ore

Via Platts: Open interest in iron ore futures traded on China’s Dalian Commodity Exchange has fallen below 1 million lots in August, after peaking in April above 2.6 million lots. Iron ore open interest stood at 975,722 lots last Thursday, a year-to-date low, and at 981,858 lots on Monday. One lot is 100 mt. The


The future of iron ore

Terrific stuff here from Westpac’s Justin Smirk: •Demand for iron ore has been very robust this year but more importantly there has been the collapse in Chinese ore production in response to industry reforms as well as a soft patch in imports. The more rigorous implementation of environmental policies has hit iron ore miners hard.