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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The better news for coking coal continues. From ANZ: Bulks were mixed, with iron ore and coking coal prices trending higher, but thermal coal prices down a touch. Chinese domestic steel markets firmed on Friday after China’s manufacturing data showed a surprisingly positive result. In addition, China’s State Council yesterday reportedly issued a 3-year plan
Find below the iron ore price table for July 2, 2013: Rebar futures rose on the day. And the charts, for spot and swap: Rebar: The spot/swap spread remains about $10 bucks out of whack: And the rebar/spot spread more like $25: I still expect prices to gradually fall away on seasonal weakness with the
Find below the iron ore price table for July 31, 2013: With swaps pricing where it is you would expect the spot price to be trading somewhere around $120 or just under. Meanwhile, it seems there are some brains at work in India after all, quite high powered ones. From Reuters: India’s mines ministry is
FMG gets a break today with an S&P upgrade to stable: Standard & Poor’s Ratings Services said today that it had revised the outlook on its ‘BB-‘ long-term rating on Australia-based mining company Fortescue Metals Group Ltd. to stable from negative. At the same time, we affirmed the ’BB-‘ corporate credit rating, ‘BB+’ senior secured
Deutsche has an interesting note weighing up whether or not BHP and Rio should pull back or continue to invest in new production today. It concludes: The big miners are now focused on maximising cash flow through cost cutting and delivering brownfield expansions. This strategy should deliver benefits near term however over the long run
From ANZ today comes some hopium for coal miners: Iron ore prices fell for the first time in six days, while coking coal prices were unchanged. Coking coal may be showing signs of bottoming after a 20% decline since March. Spot prices have firmed 2.2% in the past two weeks to USD133/t FOB Australia. At
By Leith van Onselen Find above an interesting short discussion aired yesterday on ABC’s Inside Business assessing the prospects facing the iron ore market. Of most interest, Goldman Sach’s chief Australian economist, Tim Toohey, sees the iron ore price falling to $US80 from 2015, whereas 2MG Asset Management’s Mike Mangan lambasts the Australian iron ore
From the ANZ commodities team today: Iron ore and coking coal prices firmed last week in line with a pick-up in domestic Chinese steel prices. We think iron ore prices have performed better than expected, but with restocking from China close to running its course and weaker Q3 seasonal demand, prices are at risk
I’m going to have to rename Friday “Gina leak day”. For the third week in succession that’s precisely what we have at her newsletter, the AFR: ANZ Banking Group has provided up to $US1 billion ($1.09 billion) in bridging finance for Gina Rinehart’s $10 billion Roy Hill iron ore project in Western Australia, reducing the pressure on the
Slowly but surely the world is coming back to my bulk commodity forecasts. Goldman Sachs is the latest, materially dropping its forecasts for iron ore, coking and thermal coal today. The rationale is straight from the MB playbook: As demand growth remains lackluster and several commodity markets move into surplus, the timing and scale of
Find below the iron ore price table for July 24,2013: I guess the ongoing rebar recovery, which is most remarkable for its sluggishness, is enough for support for now: Meanwhile, mining equipment manufacturer, Caterpillar, dumped a warning last night: We have revised our outlook for 2013 to reflect sales and revenues in a range of $56
Lot’s of excitement today that FMG is out of the woods. From the AFR and JPMorgan: JPMorgan believes the chances of Fortescue Metals Group completing a $3 billion-plus sale of a minority interest in its Pilbara infrastructure business to reduce debt are now less than 50/50, due to improved internal cash flows. Although Fortescue said
Fortescue is out with its Q2 production report and the deluge is building: Fortescue’s total iron shipments came in at 25 million tonnes, 40% up on 17.8 million tonnes shipped a year earlier. Fortescue mined 34.3 metric tonnes, a 79 per cent lift on the 19.2 per cent mined in the previous corresponding period. For the full
From ANZ: Bulks declined (particularly coal) on weaker Chinese import data and rumours the PBOC issued a regulation over the weekend that commercial banks should suspend new loans to ten overcapacity (but key bulk demand) industries, including steel, cement and coal. Despite lower prices, it appears the strong arbitrage import activity in April and May
Find below the iron ore price table for July 22, 2013: In news, Reuters is on the right track today: From Africa to Australia, opportunities to develop small iron mines are fast disappearing, as cash dries up and miners are unable to compete with the crushingly low production costs of the sector’s heavyweights. In Australia alone,
From ANZ: Bulks were weaker on Friday, but the weekly change was more positive. Iron ore prices were up 3.9% for the week, while thermal and coking coal prices both rose 0.9%. Coking coal prices could be stabilising after 12 weeks of consistent declines, however there could be some downside risk for the market longer
Find below the iron ore price table for July 19, 2013: And the chart: Rebar average continues to come off the bottom: Futures were up slightly too. The spread charts are definitely stretched now for spot/swap: A 5-10% correction here would be quite normal. Spot/rebar also remains stretched, more like 20% here: Has this move
Gina’s AFR continues to pour forth rumours of progress for the big Roy Hill iron ore mine: Export credit agencies including Export Import Bank of Korea (KEXIM), Japan Bank for International Co-operation (JBIC) and Nippon Export & Investment Insurance (NEXI) had been pressuring Roy Hill shareholders led by Rinehart’s Hancock Prospecting to fully guarantee that
The AFR’s Chanticleer column is ducking and weaving its way around a few potholes (or falling in them) in its iron ore coverage this week. Recently we heard from the premier column that: At a time when the resources sector is beset with an endless flow of bad news, it is impressive that Gina Rinehart’s