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

14

Will China’s anti-pollution drive hit iron ore?

UBS’s marvelously named Tom Price (pictured above on recent tour of the Pilbara) has a little note today measuring the impact on iron ore of Chinese authorities attempt to cure Beijing capital of air pollution. China’s dilemma: tighter pollution controls vs. stable economic growth Many expect the govt to manage pollution via steel production cuts,

5

Pass the popcorn: Roy Hill at finish line

Gina’s Rinehart’s immense gamble is almost ready: Australian billionaire Gina Rinehart’s Roy Hill iron ore project is close to finalising a $7.8 billion financing deal, sources said, a vital step towards an end-2015 start for the giant mine in Western Australia’s iron-rich Pilbara district. The 55-million tonnes-a-year project, which would make Roy Hill Australia’s fourth-largest

2

BHP begins the iron ore retrenchment

There’s always an excuse but the message is clear enough, BHP is cutting back less efficient iron ore mines: The trend for companies to manage their own mines instead of hiring external contractors goes on, with BHP Billiton confirming the last contractor working on its Pilbara iron ore mines will be relieved of its duties.

1

Chinese steel stocks at record highs

From the China Securities Journal: According to CISA statistics, by the end of early February inventory of the key steel manufacturers amounted to a record high of 16,328,400 tons, up 20.02% MoM. Insiders say due to multiple factors including dropping steel prices, fewer orders and difficult transport, early February saw a sharp rise in steel

4

More on Chinese banks cutting steel credit

From BofAML: Another news which was widely circulated over the past weekend and severely hit markets today was about a mid-sized bank’s decision to halt funding for developers in 1Q14. With some clarification, it’s clear that the Industrial Bank ordered to stop just Mezzanine financing for developers as well as funding for developers’ upstream suppliers

12

Iron ore, steel futures smashed

A special evening post for those that trade the iron ore majors SDRs or other overnight markets, from Reuters late today: Chinese steel and iron ore futures on Monday fell to their lowest levels since they were launched following media reports of tighter lending to steel and other property-linked sectors, dimming the outlook for demand. The

9

Is an iron ore bubble about to burst?

Bloomie has a scary report with more details of China’s iron ore for cash scams: Xiao Jiashou, known as the “steel-trading king” in Shanghai, had his assets frozen as China Minsheng Banking Corp. sues for money owed. Lenders seeking repayment are finding irregularities, including the same pile of materials used as collateral for multiple borrowings, China

1

Chinese steel production falls sharply in January

The World Steel Association has release its January figures and it’s more worrying news for iron ore followers: World crude steel production for the 65 countries reporting to the World Steel Association (worldsteel) was 130 million tonnes (Mt) in January 2014, a decrease of -0.4% compared to January 2013. China’s crude steel production for January

1

CITIC confesses Pilbara sins

From the FT: In a long mea culpa accompanying its annual results on Thursday, Chang Zhenming, who was brought in to replace Mr Yung as Citic Pacific chairman in 2009, said the “ironic fact” of meeting its first major milestone was that its first shipment from the blighted Pilbara development would dent profits in the near term.

1

Daily iron ore price update (sag)

Here are the iron ore charts for February 20,2014: Nothing all that bad here. No technical breakdowns as the falls were modest following the fugly PMI. I can’t improve much upon a quote from Reuters: Weaker steel prices may sour appetite again among traders and Chinese steel producers for spot iron ore cargoes, and likely

1

Fugly PMI tanks steel, ore futures

From the SMH: It’s not only the region’s sharemarkets and the Australian dollar that are down on the weak Chinese manufacturing numbers, China’s steel futures fell the most in about a month and Dalian-traded iron ore also dropped. The most briskly traded rebar for May delivery on the Shanghai Futures Exchange was down 1.1 per cent