From The West Australian: The company behind a proposed $6 billion iron ore project in the Pilbara has signed an agreement with a Chinese company to build the mine. BBI Group announced today it had signed a memorandum of understanding (MoU) with China State Construction Engineering Corporation (CSCEC) to build the Balla Balla mine, port
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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The pressure DCE is not abating with it down -1.5% at the open: The reason why be still more PBOC mortgage tightening, via Reuters: The People’s Bank of China (PBOC) will strictly check the source of down payments by individuals purchasing property in Beijing, the Beijing operations office of the Chinese central bank said in a
Iron ore price charts for March 23, 2017: Spot firmed. DCE fell overnight by managed to close unchanged. Coal is still firm. Steel looks toppy. While coal holds on there is an excuse to not run for the exits but I still see us biased lower. We’re just too high for developing circumstances. That’s where
Macquarie stating the obvious today (but still before most others): As good as it gets: Hedging our bets Most questions we encounter are about why commodity stocks shouldn’t be lower rather than why they should trade higher. The bears have been on this track for more than 6 months, so we are cautious about putting
Iron ore price charts for March 22, 2017: Spot down. DCE stabilised overnight. Coals stable. Steel rolled. We’re just blowing the froth off here. There never was much need for the blowoff of the last few months. We should be back at $60 by mid-year. World Steel is out with February figures: World crude steel production
Dalian is open and soft but holding: The good ‘ol days return today as Big Iron is getting hosed: FMG is falling -5% and describing a superb head and shoulders topping pattern: The uptrend is broken but we’ll need to see it breach the $5.80 neckline before the topping pattern is confirmed. RIO has a
From Macquarie today: Steel sentiment softened slightly from five-year highs but remains at historically elevated levels, especially among steel mills. Mill profitability is extremely high, and production is starting to lift, led by medium-sized mills. Seasonal norms are well under way, with construction and infrastructure demand picking up into the spring construction season and
Dalian is down the better part of -5% today: But nobody cares as Big Iron has barely budged: Any time iron ore is in the $90s there is only downside. FMG’s potential head and shoulders top has firmed a little. Big Gas is holding too despite the mushrooming political risk: Big gold is under-performing: Big
Via Bloomberg on Chinese automotive: …when January sales figures came out, they were up just 0.8 percent from a year earlier, compared with an average 14 percent pace of growth through 2016. Optimists’ hopes were undimmed: The timing of Lunar New Year made January an unusually short sales month, and their confidence looked to have been validated when
Iron ore price charts for March 17, 2017: Spot was down a little. Paper was flat overnight. Steel too. Coals faded. Chinese port stocks added another one million tonnes last week to hit a new all-time record. CISA major mill output was up 3.5% in late February to 1.72mt per day. This remains 2.3% below
From BNA: Brazilian mining giant Vale shipped 719,885t of iron ore from its flagship US$14.3bn S11D Carajás mine in Pará state in January-February. The figure includes 264,400t in January, when the mine shipped its first exports. Vale officially cut the ribbon on the project, in Canaã dos Carajás municipality, in December. The first commercial shipment
Iron ore price charts for March 15, 2017: Spot jumped. Tianjin benchmark is at $92.10. Dalian is at new closing highs for the rally. Other prices have not updated. Chinese data was good enough but not this good. More inventories if it continues. Any time we’re above $90 the market is going to struggle.
Dalian as adding to overnight gains as Banana Man piles back in: Big Iron is following: Charts now have false breaks from earlier in the week but stocks are probably under-performing the futures move, not least on a further raft of upgrades today. Big Gas is holding up better than it should as oil weakens
From Macquarie today: It has been an interesting start to 2017 for commodity markets, with a maturing industrial recovery, rising inflation expectations and a surprising degree of economic confidence all combining to offer an upward price bias. However, the start of March has certainly seen some cracks starting to appear, notably in China
Iron ore price charts for March 14, 2017: Spot eased. Paper took off again overnight and Dalian is now just 2% short of new highs as Banana Man revived. Adjusted for taxes and currency it is at $82 and change. Steel rebounded close to a new high. Coals were calm. Chinese data yesterday was firm. But
Dalian is open and following its recent pattern has launched again. We’ll see if it can hold this time during the day: Meanwhile, the sell-off for Big Iron is starting to do some chart damage. FMG is approaching the $5-handle again and its uptrend is busted: Any decent rebound at this point is going to
Bloomberg really doesn’t understand the mining business: The world’s biggest iron ore miners will be able to withstand the expected plunge in prices because their race to cut production costs has dramatically lowered the industry’s margin pressure point, allowing them to keep fueling a cash juggernaut that’s revived the mining sector. More than 90 percent of