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.
Also Check – Australian Dollar
Find below our daily feed of market analysis
The ferrous complex was weak across the board Friday June 18, 2021 as spot fell, paper fell more overnight and steel eased: A rising DXY is proving a headwind. In news, let me show you some material from Bloomberg that needs unpacking: There’s a simple reason why no amount of work meetings and control orders
Truly, global markets do not understand commodity cycles. Some of this is folks talking their books. Some of it is pure ignorance. What we can say for sure is that as the commodities bubble pops, the leftover space is being filled with balderdash. All areas of the commodity market are being covered in rhetorical manure,
The ferrous complex went through some gyrations on June 17, 2021 with paper and spot markets crossing over trying to catch one another: There’s not much else to report in the day. Broader circumstances are clearly turning hostile to high prices as China tightens and slows ahead merging with a slowing US and Fed policy
As we know, I triggered about a $30 rally in iron ore prices in the past week when I reminded the market that Vale was facing another possible dam bust and crisis (or it was thew wind). The news today is that that crisis ie easing swiftly: Brazilian regulators have inspected the Xingdu damn and
The ferrous complex was weak on June 16, 2021 as spot, paper and steel all fell: There was a pretty nasty combination of factors. First this: The State-owned Assets Supervision and Administration Commission has ordered state-owned enterprises to control risks and limit their exposure to overseas commodities markets, according to people with knowledge of the
As expected, China continues its systemic push towards tighter credit and economic restructuring away from construction. This time it’s wealth management products, an old favourite for developers to raise cash: Highly rated WMP will be prevented from buying junk debt from developers. This addresses the underlying duration mismatch. $400bn in junk debt will need to
The ferrous complex held on June 15, 2021 as many other commodities rolled into the big plunge. Spot was stable, paper up a bit, steel down: Steel was actually down yesterday but I didn’t have prices for a few days. The news is another accident, this time in China where more supply has come off
The ferrous complex was mostly closed over the long weekend with much of Asai shut too for the Dragon Boat holiday. Spot iron ore rose and everything else was on pause: News over the break was very bad for demand as Chinese credit cratered but it was better on the supply side with Vale facing
Australia’s personality-disordered PM, Scott Morrison, is galavanting around the world drumming up support to contain China. He’s invited himself to the G7 to lace it with anti-CCP warnings. He’s dropped into Downing Street to spray Beijing. He’s soon off to the White House for an anti-CCP powwow. At home, more US marines and naval access
Ever since China installed its “three red lines” policy early this year, there have been increasing signs of stress in China’s mega-development sector. Floor area starts have dropped sharply, equity markets have punished the sector and credit markets begun to tighten the noose on the more freewheeling names. That process continues today as Chin’s greatest
The ferrous complex was well bid on June 11, 2021 for no reason that I can discern beyond my own posting. Spot was firm. Dalian paper jumped overnight. Steel has not updated: Dalian trading started weak yesterday until I posted on Vale’s latest dam troubles. Although it was not news, my reminding the market of
I said recently that iron ore was not going to go to $300 unless we saw some new crisis to supply. Either another busted dam in Brazil or nationalist Indian policy or the like. Well, we have a candidate, via Reuters: Regional Labor Department for the southeastern Brazilian state of Minas Gerais says Vale SA’s decomissioned
Readers will know that we are of the view that China has entered a new round deleveraging and economic restructuring that will crash commodity prices in due course. This plan is two-pronged. It aims to slow the development sector to end overbuilding. And it aims to deleverage local governments as well. I have already discussed
The ferrous complex was firm yesterday with a broad rally on a delayed reaction to Tuesday’s news about more Brazilian mine suspensions. Spot was up. Paper flat overnight. Steel rallied: Chinese port inventories are at 127.65, adequate only: Not much else to say. I still think that the risk of an EOFY sell-off is high
Lordy, already! A few months of three red lines policy and the titans totter. China’s largest property developer, Evergrande, is increasingly on the nose for credit markets: And equity markets: Regulators have instructed Evergrande counterparties to stress test their exposures. Evergrande denies any wrongdoing in its partly-owned Shengjing Bank Co, as well as heavy discounting
The ferrous complex went a bit haywire yesterday with prices all over the joint. Spot jumped. Paper roared overnight. Steel fell: There’s not much new here. We’re just be pushed around within a range. That said, steel mill margins are still getting belted which is a major warning for iron ore going into EOFY. In
Good stuff from ANZ on iron ore. All points I have made. Copper is also at risk as China slows. On oil, expect an Iranian deal.
Australia’s nemesis, The Global Times, is back today with more Australia bashing: #Australia has good reason to diversify its #ironore exports to #China ASAP. According to Rafael Suchan, CEO of Germany’s Scholz Recycling Group, China’s iron ore imports will be nearly halved by 2030 with the help of steel scrap #recycling. pic.twitter.com/X9mEJmoekD — Global Times
Readers will recall that there has been something a mystery in some components of the very steep slowdown in Chinese debt issuance over the last four months. Most pointedly, local government borrowing, which accounts for a lot of infrastructure and property investment, cratered 80% year on year in the four months to April despite having
The ferrous complex was universally weak on June 7, 2021. Spot fell. Paper tumbled. Steel was whacked. That this all happened on the day that Brazil plugged another dodgy dam is not a sign of market strength. The proximate cause was mediocre Chinese trade data. Iron ore imports for May were lousy at 89.79mt and
TS Lombard with the note After leading the recovery last year, real estate investment is set to decelerate under macro and sector-specific deleveraging campaigns as well as higher input costs. We expect property investment to reach 5% yoy in H2/21 from13% you in April. The slowdown will hit local government financing and investment. The combined
The ferrous complex was mixed Friday with spot down, paper up overnight and steel firm as well. But that all misses the point. This market is showing signs of early trouble: Why am I getting nervous? CISA late May steel output fell heavily: It is not unusual for May production to pull back a little
The ferrous complex rolled over yesterday and last night as the US dollar rallied. Spot was up a little but paper fell overnight. Steel has not updated: If the US dollar advances from here on strong US jobs then expect iron ore to have peaked and fall away earlier. It is a factor after the
The ferrous complex was much calmer on May 2, 2021 than in recent times. Spot hardly moved. Paper warmed a bit. Steel fell: In other news, Westpac reports on the rebound in Aussie volume after Q1: May Australian iron ore exports fell short of our expectations at just 75.7mt. That’s -1%yy and -4%3myy. Given recent
The ferrous complex took on the outlines of a circus yesterday as everything rallied. Spot was up. Paper up more overnight. Steel too: The trigger? This: Authorities had urged local long-process steel producers to cut production by 30%-50% in March to improve air quality, sparking supply concerns as the city accounts for more than 13%
The ferrous complex is getting more and more volatile. I take this as a sign that we’re topping out given it appears to be a struggle between bulls and bears versus the former bulls only. Spot jumped. Paper went further overnight. Steel is lagging: Yesterday’s steel PMI was soft with output booming but new orders
The ferrous complex firmed on Friday May 28, 2021 as Chinese policy pushed the market around like flies to wanton boys. Spot firmed. Paper and steel jumped. China is wrestling with itself. On Friday we had this to lift prices: China’s Ministry of Industry and Information Technology will seek to establish a mechanism to contain
Whether China cuts off Australian iron ore is not in question. Only the timing of it is. As well as what it will do to the Australian economy when it does. The causes of the cut-off are well understood. There are three main drivers. First, the US/China cold war is bifurcating the global economy into
The ferrous complex bifurcated yesterday as spot corrected lower after the day before’s price wackness. Paper shot up overnight with a broader dirt rally. Steel has not updated: A snippet from Capital Economics sums where we are at: The last few weeks of pump and dump have been a game of politicised speculation. The price
As usual, Australian discussion around the political economy is more gawking than it is intelligence. One could never accuse the Rich List of being anything but the former. But this year, especially, its timing is ludicrous. The top two richest, and three of the top ten, are at imminent risk of immense wealth loss: Gina
