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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20

Daily iron ore price (rocket!)

Yesterday Rio Tinto (RIO) announced its plans to cut jobs all over, excluding their iron division (BHP was not so kind earlier in the day) but you wouldn’t know it from action in the iron ore price, which, to put it mildly, blasted off: Here are the charts: And steel: If there is another country

5

Iron ore price rises strongly

The Golden Week may not have been overly kind to China but it did no harm whatsoever to the iron ore price: I’ve noted over the past few days that the futures market was signaling increased confidence in Chinese restocking and now the physical market is following through: As is the steel market in China:

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Daily iron ore price update

Here is Friday’s iron ore table: Here is the 12m swaps chart with resistance in the $120 region: Again with holiday closures in China not much broader action. According to Reuters, the forwards action is on the back speculative buying: Bids for iron ore forward swaps remained firm on Friday, reflecting investor expectations spot iron

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Daily iron ore price update

Little to go on yesterday with many markets still in holiday mode but the 12month swap rallied handsomely: The only other data point of significance was Port Hedland shipping volumes for September which showed a sharp drop: It’s looking a bit toppy but not enough to draw any conclusion. I wondering if the RBA has

32

Orewellian iron

Find yesterday’s steel complex prices above. There are a couple of interesting bits around on the iron ore price today. The first is from Alphaville on ye auld price floor: The cost curve theory is that the highest cost producers (who happen to also be in China) will drop out when iron ore prices fall below

60

Chinese steel production to fall

From the AFR: Chinese steel production will fall over the next three years, according to figures released at a major iron ore conference on Thursday. The Deputy Secretary-General of the Metallurgical Mines Association of China, Liu Xiaoliang, forecast that by 2015 China would demand only 705 million tonnes of crude steel. That is a fall

0

The bad news bulks

Courtesy of ANZ: Newcastle front month futures prices declined to USD87.2/t dragged lower by negative demand sentiment for energy related assets. Iron ore did not fare much better, falling 2.5% to USD103.7/t, while Australia FOB coking coal prices also declined by USD1.42 to UDS146.79. Slower steel demand growth in China and Europe has created a surplus in Asia, weighing on prices.

1

Daily iron ore update

Yesterday’s iron ore prices show continued consolidation: I’m not sure we’re going to see much more upside here in the near term. The decision by India yesterday to limit some iron ore exports seems to have little effect on the market. Such news used to send the price up 20% or more. Here are the

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The short story of a loss-making Chinese steel firm

Remember Baosteel, which had a new steel project approved by the government, and the construction of the new plant started, then stopped? The reality that the steel industry has a little problem of overcapacity is no secret.  With absurdly low profit margins as the slowing economy combines with high financial leverage. A few years ago, Baosteel acquired a plant at Loujing

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Daily iron ore price

Friday saw the ore price end the week on a soft note: Not much to add except to say that the 12 month swap looks reasonably priced at these levels given the outlook: Chinese steel prices took a breather: And there is still no real drawdown on Chinese port inventory:  

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Iron ore price volatility continues

Another wild day for the iron ore market with 12m swaps reversing spectacularly, spot showing less trouble and Chinese steel prices firming up.  So long as the rally in Chinese steel prices persists so too will the ore price. And on that front, the World Steel Association released its August figures today: Brussels, 20 September

2

Coking coal still falling

Courtesy of ANZ. Newcastle FOB October coal prices improved slightly to USD91.8/t. BHP Billiton boosted thermal coal production in its 2012 financial year, with record high output at two of its thermal coal mines in Australia and Colombia. BHP’s coking coal data was more bearish, with a large fall in earnings at its coking coal operations in 2012 due to