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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25

Evergrande losers take company executives hostage

Via Straits Times: Footage of Evergrande’s management being held hostage in company offices by anxious retail investors made the rounds on China’s social media earlier this week. “I have with me Nanchang’s top Evergrande representative surnamed Chen,” said WeChat user Yang Qiwen, referring to the city in Jiangxi province in south-eastern China. The posting included

3

UBS: Sell Fortescue, RIO

And here they come. UBS on FMG: Downgrade to Sell: iron ore fundamentals deteriorating faster than expected We downgrade FMG to Sell (from Neutral), cutting our target to A$15/sh (from A$18/sh). Since peaking in July, the stock is down 34% while the iron ore price has more than halved. At spot (~$113/t) FMG still generates

11

The disastrous Fortescue chart

A quick note on a few FMG points as iron ore continues to fall. Dalian today: First, what a horrible chart FMG has with an immense double top: How far FMG corrects obviously depends upon the iron ore price. My best guess is we’re going back to $60 over the next six months, with a

7

Daily iron ore price update (Ding! Fasten your seat belts)

The ferrous complex was weak again on September 14, 2021 as spot fell, paper fell further overnight and steel is looking toppy worldwide: The PBoC tightened futures limits again and Evergrande is going bust. Enough said. Perhaps more importantly, the China property developer bust is transpiring just as the global post-COVID steel boom tops out.

3

Next up: The coal crash

It’s been a wild few months for coal. We’ve gone from wallowing prices to record highs in the blink of an eye. But there are signs it’s coming to an end. Coking coal has been the craziest. As Chinese steel output has collapsed, coking coal has gone through the roof. This was always pretty stupid.

4

Goldman won’t mention the ore

Clearly, Goldman Sachs is still too long commodities: Growing scarcity across physical markets. Since last October, policymaker and investor focus has remained on the vaccine-driven demand recovery from the deepest recession on record. Yet today, physical goods demand has reached such high levels — above pre-pandemic trends in all but oil — that the system

3

Iron ore hits new low as Evergrande gets extend and pretend

The soft bailout of Evergrande has begun: Regulators in Beijing have signed off on a China Evergrande Group proposal to renegotiate payment deadlines with banks and other creditors, paving the way for a temporary reprieve as the cash-strapped developer struggles to come to grips with more than $300 billion of liabilities. China’s Financial Stability and

5

Daily iron ore price update (China dirt)

The ferrous complex was mixed on Friday 3rd of September 2021: In news, China wants more ore: China’s iron ore producers aim to increase domestic iron ore concentrate output by more than 100 million tonnes between 2021 and 2025, an official with the country’s steel industry association said on Saturday. Luo Tiejun, the vice-chairman of

2

CBA wrongly wrong on iron ore

The CBA has opted for the glass-half-full approach to steel and iron ore: “For iron ore prices to find meaningful support again, we would need to see policy on China’s steel output cuts relaxed,” he says. “That’s not as unlikely as it seems, especially if steel prices lift notably. We think that’s completely plausible given

5

Daily iron ore price update (more output cuts)

The ferrous complex was smashed on September 1, 2021 as spot cratered, paper held and steel tumbled: News was all about more output cuts: Production restrictions in various regions have continued to advance, and there are signs of increasing efforts. Due to the strengthening of dual control of energy consumption, the Guangxi region has imposed

1

Iron ore crash pushes commodity price index lower

The national accounts for the June quarter revealed that Australia’s terms-of-trade (ToT) hit its highest ever level, surpassing the September 2011 peak: That is likely to the be as high as the ToT gets, however, with the RBA’s commodity price index for August registering a 6.0% decline in SDR terms after hitting a record high

5

Stay short iron ore

Stay short iron ore. Why? Nomura explains: Executive summary Beijing’s recent regulatory blitz on several sectors, including off-campus tutoring and internet platforms, has garnered investor attention. However, markets may have become so focused on the regulatory storm that they ignore the elephant in the room: Beijing’scurbs on the property sector, which makes up one-quarter of

6

Where is green steel at?

TSLomberd with the note: We buy a basket of five ‘green steel’ stocks: ArcelorMittal, ThyssenKrupp, SSAB, Fortescueand Voestalpine (MT NA, TKA GR, SSABA SS, FMG AU, VOE AV), equally weighted at 20% each relative to selling the SPDR S&P Metals and Mining ETF. While the green steel movement is still nascent today–saddled with high initial

0

Daily iron ore price update (to the moon!)

The ferrous complex launched on August 24, 2021 as the flushed out bottom of last week turned higher with gusto as expected. Spot and paper boomed. Steel has still not updated: From a contact, the action was all speculation: 09:55:30  The credit meeting. PBOC Governor Yi Gang hosted a meeting yesterday regarding monetary and credit