Texture from Reuters: Financial markets in China are closed on Friday for the nation’s Mid-Autumn Festival. Amid declining iron ore seaborne arrivals, purchases of the material may pick up due to some restocking demand of steel mills ahead of the country’s National Day celebrations in early October, said Richard Lu, senior analyst at metals consultancy
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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Via Bloomie: “Steel demand is no longer going to be what it was,” Ed Morse, global head of commodity research, said in an interview. “No combination of India, Brazil and any other emerging-market country, no matter how big, is going to replace what China did alone,” he said, referring to spike in demand from the
Texture from MySteel: China’s imported iron ore prices are likely to remain buoyant for the immediate future, thanks to additional procurements many steelmakers are undertaking ahead of the upcoming National Day Holiday over October 1-7, according to market sources on Wednesday. “Iron ore prices may remain relatively strong short-term, because there are still many mills
The thermal coal crash driven by falling Chinese imports just keeps getting deeper, via the AFR: Billions of dollars worth of Australian coal projects are under threat as slumping prices render about 19 per cent of the world’s existing seaborne thermal coal supply loss-making. Adani’s Carmichael and Whitehaven’s Vickery mine projects were lucrative proposals in
Texture from Reuters: “The continued recovery from recent (supply) disruptions in Australia and Brazil showed in stronger iron ore imports,” an ANZ Research note said. China increased its iron ore imports in anticipation of stockpiling ahead of China’s National Day holidays in early October, it added. But the price volatility reflected lingering concerns about demand
Texture via Reuters: “Steel mills across China are ramping up their steel production as Tangshan sintering cuts kick in. This means firm demand for iron ore in the ferrous complex,” said Darren Toh, a data scientist with Singapore-based steel and iron ore analytics firm Tivlon Technologies. “The rebound in prices recently echoed robust demand in
More iron ore: Exports from Brazilian mining giant Vale’s flagship S11D Carajás iron ore operation in the first eight months were worth US$2.92bn, up from US$2.87bn in all 2018 Exports hit US$1.74bn in January-August 2018. Vale exported 44.7Mt of iron ore from the complex (pictured) in northern Pará state in January-August. The figure is up from 36.7Mt during the
Texture from Sinocism on new stimulus measures: More policy support for the economy coming, certainly not like the flood-like stimulus of previous downturns, but drips of stimulus continue to dribble out. China to take targeted measures for steady economic growth – Xinhua Further steps will be taken to ensure the stability of employment, the financial
Texture from Reuters: “Overall production curbs in Tangshan in September are on par with August, which are loose,” Huatai Futures said in a note, adding that output restrictions in Wuan, county-level city of the second-biggest steelmaking city of Handan, tightened slightly this month compared with August. “We believe that Chinese demand has further room to
Texture from Reuters: China’s biggest steelmaking city of Tangshan will carry out output restrictions on industrial firms for September and early October, to further strengthen improvement of its air quality, state media reported on Tuesday. More than 30 steel mills in Tangshan have been asked to cut operations throughout the month. From Sept. 1 to
Bloomie has the trigger for the fun: China will maintain “reasonably ample” liquidity and “reasonable growth” in aggregate financing as it implements a prudent monetary policy, the State Council’s financial stability and development committee says at a conference chaired by Vice Premier Liu He. Various risks are “controllable” overall as the economy is stable and
Texture from Reuters: Some steel mills were seen beefing up their iron ore stocks before the week ends as they expect production curbs in China’s top steelmaking city of Tangshan to be eased in September, and also to prepare for a possible buildup in steel demand. “Steel inventories are easing from the highs,” said Darren
Who said animal spirits are dead! Via Australian Mining: Venture Minerals plans to restart operations at the Riley iron ore mine in Tasmania after a pre-feasibility study showed $31 million of potential cash generation. The company previously mined at the project in 2014, but suspended operations the same year due to low iron ore prices.
Texture from Reuters: Steel glut in China and seasonally weak domestic demand for the metal weighed on prices in recent weeks, including those of steelmaking raw materials. The slump in steel prices along with higher cost of raw materials — iron ore still trades above 2018 price levels despite its pullback from five-year highs —
Texture from Reuters: The glut and tepid demand for steel in top producer China have dragged prices of the construction and manufacturing material lower, putting strain on the profitability of mills. “We heard some of them are already making losses,” said Richard Lu, senior analyst at metals consultancy CRU Group’s Beijing office. “They have decided
Texture from Reuters: There is still “a degree of scepticism regarding the likelihood of any concrete near-term progress” in the U.S.-China trade talks, ANZ Research said. The downbeat outlook for steel demand, along with anti-pollution production curbs in China, dragged prices of steelmaking raw materials lower, including iron ore. “Coupled with the slowing steel market,
Financial markets are really just large bucket shops so you can always predict what is coming at certain points of the cycle. For mining, the cycle peak is always marked by the “dividends are sustainable” pitch, via AFR: Fortescue Metals’ dividend policy is “definitely sustainable” says chief executive Elizabeth Gaines as the iron ore miner
Texture from Reuters: China is willing to resolve its trade dispute with the United States through “calm” negotiations and resolutely opposes the escalation of the conflict, Vice Premier Liu He, who has been leading the talks with Washington, said on Monday. “The U.S.-China trade war has intensified, and aside from the direct impact of tariffs,
Texture from Reuters: “We could see further weakness,” said analyst Edward Meir, commodity consultant at brokerage INTL FCStone in London. “The gains we saw … seem to be just a short-lived technical bounce, as a sense of unease still seems to linger over a number of markets ahead of the September 1st U.S. tariff imposition
This is where we don’t want trade wars to go. Via Herald Sun: Australian iron ore is suspected of being used to help build China’s next-generation nuclear-powered and ballistic-missile attack submarines, according to security and industry experts. Consignments from Australia’s booming iron ore exports to China are likely being diverted by Beijing into the steel
Texture from Reuters: “We believe the selling has been overdone,” said ANZ senior commodity strategist Daniel Hynes. “We see prices stabilising at around $90 a tonne in the near term.” “Steel output curbs in China and ongoing trade tension with the U.S. are the key headwinds,” Hynes said in a note. “These should result in
Texture from the FT: “Headwinds to Chinese demand are growing, with industrial output growth the weakest since 2002 and infrastructure investment growth weakening,” analysts at Numis wrote in a note. “Iron ore inventories are rising and mills’ profit margins are under pressure as falling steel prices wipe out the benefit of the drop in raw
Texture from Reuters: “Despite the steel production restrictions in China, I think demand for iron ore, particularly for high-grade materials, is still at a healthy level,” the trader said. While the U.S.-Sino trade dispute has dampened global economic growth, it has not yet affected Chinese demand for BHP Group’s iron ore, Chief Executive Andrew Mackenzie
Some amusing analysis here for you with BHP’s new result. It missed consensus profits above $10bn pretty badly: But that’s history. Looking forward is much more concerning. It’s all about iron ore and coking coal, the two major drivers of returns: Here’s the realised prices: My outlooks for CY2020 are $50 (FOB) for iron
Texture from Reuters: Iron ore pulled back during afternoon trade amid market talk that China’s top steelmaking city of Tangshan has ordered deeper production cuts over a four-day period – Aug. 18-Aug. 21 – to curb pollution. Reuters could not immediately verify this. Expectations that iron ore supply will further improve also weighed on prices.
Texture from Reuters: Brazil’s Vale SA, the world’s largest iron ore exporter, said it had to temporarily halt operations at the Viga concentration plant that is part of its newly-acquired Ferrous Resources do Brasil due to a permit problem, impacting some 330,000 tonnes of iron ore production a month. But it said the suspension would
Texture from Reuters: Shanghai steel futures managed to push higher on Wednesday despite unexpectedly weak Chinese economic data for July, including a marked slowdown in industrial output growth amid a protracted U.S.-Sino trade war. “Investors took a glass half full approach to the weak economic data in China, with expectations of extra stimulus measures rising,”
Texture from the AFR: Australia supplied a record 74 per cent of China’s imported iron ore in June, according to trade figures, almost double the monthly average from 10 years ago. As the world’s largest manufacturer and second biggest economy, China is also reliant on Australian coal and uranium to keep the lights on and