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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Find above the iron ore price complex chart for December 10, 2012. The recent Chinese data seems to have suddenly convinced traders that Chinese rebalancing is a sham. Not without justification. The data flow showed pretty clearly that it is more investment that is driving the rebound in growth. Still, the move is highly speculative.
Find above the iron ore price table for December 7, 2012. As you can see, spot hit the afterburners. Last week’s Politburo rhetoric and a little support from rebar seems to have sent traders barmy bullish. Good for them, what’s the evidence? First, here’s the ore chart: And the steel chart: Local bulk shipping rates
Find above the iron ore price complex chart for December 6, 2012. Some more stability clearly, no doubt on the ongoing hope that China will support growth, as the Politburo suggested. Still, for now, the raw volume figures remain lacklustre. Here is the November Port Hedland shipping chart for iron ore: Figures tend to weaken in
Find above the iron ore price complex table for December 5, 2012. As you can see, for yesterday at least, the gap between swap and spot was closed in favour of the latter: So, is the correction over? I don’t think so. And neither does ANZ, which released its monthy forecasts for the commodity complex
Find above the iron ore price complex chart for December 4, 2012. A good day for iron ore, defying my recent pessimism. Still, it seems I’m not the only one expecting ongoing falls. From Reuters: Construction activity slows during winter in China, cutting demand for steel products, whose prices have fallen recently to levels last seen
Brazil’s Vale has announced further cuts to its planned iron ore expansions. From the Globe and Mail: Brazil’s Vale SA , the world’s second-largest mining company, cut estimated 2013 capital spending by 24 per cent after a global slowdown and a drop in iron ore prices led the company to rethink its outlook for expansion.
Here is the the iron ore price complex chart for December 3, 2012: Spot still resilient, really, with some hope as well that swaps have bottomed. Not so long as Chinese steel prices keep falling, however. In some good news for the bulks and beleaguered thermal coal miners, it looks like a breakout from the recent
Things are not looking good for the iron ore juniors. From BS: Shares in Sundance Resources remain in a trading halt, as a potential takeover deal with suitor Hanlong Mining appears to be falling apart. Sundance released a statement on Monday saying Hanlong wanted to delay the deal because it could not secure credit approval
China has released it November steel PMI and it has rolled over from the October recovery, down 3.5 points to 49.2: New orders especially took a pounding, as did new export orders. Sadly, inventory of raw materials rose the highest in six months. Needless to say, this is a rather toxic mix. More downside ahead
From ANZ: Last week Newcastle physical thermal coal prices were up 2.5%, but iron ore and coking coal prices fell 2.8%. Australian thermal coal prices gained on improved activity on-screen ahead of January annual term talks between producers and Japanese utilities. Traders were reportedly covering short positions ahead of year-end. Premium hard coking coal prices ended the week lower, in line
Find above the iron ore price table for November 30. As you can see, the slide is gathering pace, especially in China where rebar is now crashing towards its low for the year: Given this, the spot price is still dramatically out-performing: The percentage spreads between spot and swap and spot and rebar thus remain
But what exactly? The AFR and BS are reporting it’s all about productivity: Rio said it had boosted the size of the expansion plans to 360 million tonnes from 353 million tonnes previously through de-bottlenecking and productivity improvements with minimal spend. It has a current production capacity of 237 million tonnes and expects to reach 360 million
Here is today’s iron ore complex chart, where the correction continues: And the chart: Still no spread compression, which tends to happen during decent corrections, so plenty more downside potential for spot. Today’s news is the fightback offered by Fortescue’s CEO, Nev Power, yesterday. From The Australian: FORTESCUE Metals Group chief executive Nev Power has
By Leith van Onselen Earlier this month, Rio Tinto’s Chief Economist, Vivek Tulpule, told reporters that the firm believed that China’s economic growth would rebound and stay strong until 2020: Rio Tinto expects economic growth in China to rise to at least 8 percent in 2013 and average 8-9 percent to 2015, a more bullish
Courtesy of ANZ: Reports suggest Chinese buyers had defaulted on three Australian thermal coal imports and some from South Africa, but are unlikely to spark a wave of cancellations (that we saw in May/June). We remain cautious – China’s domestic stockpiles at power plants are high and many traders in China could face tight liquidity