Here is the iron ore price table for February 1, 2013: And chart: So, no sooner have swaps broken out than they’ve scuttled back under cover. No movement in Chinese steel prices. But the futures market was different with rebar futures piling it on again: My spread charts still look seriously sick. Spot to swap
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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Courtesy of ANZ: April Newc coal prices rose USD1.50 to USD94.75/t, while spot coking coal traded at over USD167/t after flooding in Queensland’s coalfields. The Bowen Basin was hit by between 200 and 400 millimetres of rain, but the disruptions are not as widespread as the “Big Wet” of 2011. Even so it may take several weeks for operations to
Find below the iron ore price table for January 25, 2003: And the chart: Steady recovery in spot and swap still balking at resistance. This has left my spread charts just as broken. Spot to swap signaling tension between the short and long term view: And spot to rebar signaling a complete disconnect between ore
Find below the iron ore complex price chart for 24 January, 2013: And the chart: Another slow day on the hustings with swap balking at its former high and spot still showing strength, apparently on Pilbara weather and some strength in Baosteel contract prices. In news, today’s point of interest is the shorts of David
Here are the highlights of FMG’s December quarter production report: By year end that is another 100 million tonnes online versus two years earlier, all of India’s fading capacity available from just one firm. When I wrote my 2013 forecast piece I was not aware that FMH had renewed its Kings push. Combined with Rio
From the AFR: BHP Billiton is on track to deliver an average of 10 per cent annual volume growth to the end of the 2014 financial year after reporting strong production in the December quarter. The miner beat expectations for iron ore production in the December quarter by more than 1 million tonnes, with Pilbara
Find below the iron ore complex price table for January 22, 2013: And the chart: Not much to report, clearly. The big news overnight was the release of December world steel production figures and thus for the year as well: World crude steel production reached 1,548 megatonnes (Mt) for the year 2012, up by 1.2%
Find below the iron ore price complex table for January 21, 2013: And the chart: The big news overnight is that Indian ore continues to slide down the top exporters list. From Reuters: South Africa overtook India to become China’s third-biggest iron ore supplier in 2012, while Australia strengthened its dominant position as the major
Find below the iron price complex price chart for January 18, 2013: And the price chart: My view of the Chinese data dump on Friday was that it was bearish for iron ore, given the failure of fixed-asset investment to push upwards: The AUD agreed, down sharply from the release right through Friday’s northern hemisphere
Here is the iron ore price table for January 15, 2013: And the chart: Nothing startling here as the correction from recent highs continues. The bull trap thesis got a boost with swap punching back through its $120 support: Of greater concern, however, was the softening of rebar and billet prices which are struggling to
By Leith van Onselen The biggest news over the festive break was the ongoing surge in iron ore prices, which have risen by more than $US30 per tonne since December. Iron ore is Australia’s biggest export commodity (see below chart) and any increase in prices flows directly into national disposable income, boosting company profits, government
Find above the iron ore price complex table for December 12, 2012. Stability but for how long? While I no longer put much faith in it, yesterday the Baltic Dry tanked 8% almost exclusively on tumbling capesize (used for the bulks) rates, which is a bit of a eye-opener: In other news, yesterday BREE upgraded