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.

Also Check – Australian Dollar

Find below our daily feed of market analysis

0

Dalian falls as PBOC tightens again

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

5

Good ‘ol days return as Big Iron crashes

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

0

China cars red flag for iron ore

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

6

S11D up and pumping

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

1

Big Iron charts sicken as commodity traders puke

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

2

Why lower cost miners is very bad news for iron ore

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