Reuters has the texture: “Demand is pretty good, but on the supply side there’s a little bit of change in the momentum,” said Helen Lau, mining and metals analyst at Argonaut Securities in Hong Kong. The market seems to have taken a pause, she said, following the sustained rally this year that had pushed the
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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Reuters has the wrap: The most-active DCE iron ore contract closed down 1.2% at 899.5 yuan a ton, while the rest of China’s ferrous complex edged higher. “You may see some correction today, or maybe tomorrow, but generally speaking, the uptrend is intact, with demand still supporting the prices,” a Shanghai-based trader said. China’s government
The spot price crawled higher. Paper sold off. Steel isn’t going anywhere. In news, China is hammering speculators via Dalian price hikes, at Reuters: * China’s Dalian Commodity Exchange (DCE) said it will raise transaction fees for all iron ore futures contracts to 0.01% from 0.006% of the trading value, starting July 18, the bourse
Spot jumped. Paper went nutso. Steel was firm but is still stuck. It was all about Chinese data which showed a big push into MOAR empty apartments: I just don’t think that this matters terribly. Record steel output: Hasn’t triggered much activity in Chinese iron ore imports even accounting for recent supply weakness: Presumably owing to
Via The Australian: Some 15 million tonnes of Australian thermal coal worth more than $1 billion is waiting to clear customs in China, according to industry analyst Platts, with no sign of an easing in processing delays imposed since February. “Thermal coal market participants say they are yet to see any changes to Beijing’s import
Spot prices eased. Paper was stable. Steel isn’t going anywhere. Reuters sums it up: Utilization rates at steel mills across China fell to 66.02% as of Friday, the lowest since late March, data compiled by consultants Mysteel showed. That is way down on the Q1 rates. With steel inventories still at reasonable levels it appears
by Chris Becker The iron ore complex slumped yesterday for the second straight session as falling car sales took the bite out of the supply crunch: More from Reuters: China is likely to see a further drop in vehicle sales this year compared to expectations for zero growth, the country’s biggest auto industry association
by Chris Becker The Chinese steel industry is still reeling from its call for inquiry into high iron ore prices, with Dalian and Singapore futures moving higher yesterday as spot prices remain elevated. Forecasts are also being upgraded, happy news for Josh Frydenberg – albeit temporary – with the Jefferies Group revising their own ebullient
by Chris Becker The iron ore price surged again yesterday, with spot prices up nearly 4% while futures gravitating around the new S&P price forecasts stemming from the Vale supply shortfall. S&P revised its price assumptions to $90 a tonne for the remainder of 2019 from $75, $80 in 2020 from $70, and $70
by Chris Becker The iron ore complex lifted in trade on Monday after falling sharply on Friday on the back of the investigation into “market stability” by the top steel companies in China. Spot rose while futures were mixed: Interestingly, iron ore stocks rose from their low levels previously, according to Steelhome: Iron ore stocked
Spot prices crashed. Paper too. Steel is weakening again. The culprit was easy to find, via Reuters: Executives from eight steel firms representing 30% of China’s steel output, including China Baowu Group, HBIS Group, Jiangsu Shagang Group and Ansteel Group, gathered at the China Iron and Steel Association (CISA) on June 27 in Beijing, according
Spot went pop. Paper too though there was more buying overnight. Steel is caput. We’ve overcooked it here and it is going to come undone, either now or soon. Supply is returning steadily and demand is not great. The charts: Clyde Russell does an about turn: Shipments from the two major exporters, Australia and Brazil,
Spot prices stalled. Paper fell marginally overnight. Steel has flamed out as Chinese steel supply restraints have proven pretty loose, via Reuters: Tangshan, the steel hub of China, imposed last month a set of output restrictions on producers, which will remain in place until August 1. “The policy declared in Tangshan turned out to be
Spot prices to the moon. Paper stalled. Steel fell. The charts: To me this is now quite irrational. There’s enough iron ore that can come on at this price to sink it to zero. The only question is this, from Reuters: Iron ore miner Vale SA’s chief financial officer and its former chief executive should
Via Reuters: Major supplier Brazil exported 29.40 million tonnes of iron ore in June, compared with 29.83 million tonnes in May and 35.29 million tonnes a year earlier, government data released on Monday showed. The chart: There is slow improvement here year on year: March -7.77mt April -7.54mt May -9.15mt June -5.91mt Once Brucutu is
Spot prices firmed but ignored the fireworks in paper markets. Steel is still going nowhere, really. CISA output for early June jumped to all-time records. The charts: Reuters sums up the irrationality for me today: “While the Brucutu restart will help boost supply, shipping the additional volumes from Brazil to China could take about 45
Spot fell. Paper too. Steel is still being supported by Tangshan output curbs. CISA steel output pulled back in late May. The charts: The last chart is more marginal evidence that steel mills have hit some kind of over-production tipping point. The pullback was coming via margins anyway but enforcement by regulators achieves the same
Iron spot prices eased back. Paper fell harder. Steel jumped higher. Reuters explains: China’s top steel city of Tangshan has imposed a new set of output restrictions on its iron and steel firms because of persistently high industrial gas pollution levels, the local government-backed Tangshan Labour Daily reported on Monday. Two units of steel giant
Spot has not update but I believe it fell. Paper more. Steel is still stuck and is giving off a bearish signal. Last week’s rebar inventories climbed again and are now tracking materially above last year’s levels. Port stocks fell again, to 117.5mt, though the pace slowed. Steel mills are overproducing, squeezing the last drops
Spot at new bubble highs. Paper even higher. Steel is still going nowhere indicating that steel mill margins are getting smashed. The charts: For me the news of the return of Brucutu is the beginning of the end for the bubble. There are further supports ahead: the PBOC will cut interest rates the moment that
Via BNAmericas: Brazil’s supreme court of justice has authorized local miner Valeto resume operations at its largest iron ore asset in Minas Gerais state, the 30Mt/y Brucutu complex. In a release on Wednesday, Vale said that the decision will allow the full resumption of wet processing operations at Brucutu within 72 hours, thus increasing the average
Spot up. Paper rebounded overnight. Steel up but still stalled. Reuters has the big news: Brazilian miner Vale SA said on Wednesday that it will fully resume operations at its Brucutu mine within 72 hours after an appeals court overturned an earlier ruling that halted processing because of concern about the safety of a nearby
Spot through the roof. Paper tore it off. Steel is still stalled. Rebar inventories for mid-June are now above last year in the first sign that steel mills are over-producing, a warning for steel prices and the bulks bubble: Dalian’s nutso performance overnight was reflection of the wider risk rally. If the ECB can cut,
Spot eased. Paper was bashed Friday night. Steel is going nowhere, a standing warning for the bubble. The charts for June 14, 2019: Reuters has more: China’s Dalian Commodity Exchange said on Friday that it would raise trading limits and margins for the iron ore futures contract for September delivery , effective from June 18.