From the SMH: Global miner Rio Tinto has slowed progress of its multi-billion investment in Guinea’s untapped Simandou iron ore deposit and slashed staff, government sources in the West African country said on Monday. The sources, who declined to be identified because of the sensitivity of the topic, spoke after weekend talks between top Rio
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 below the iron ore price table for March 11, 2013: I definitely reckon the top is in for the year. Indeed, with the amount of negative press on Chinese growth, the shift towards soft-infrastructure stimulus and anti-real estate measures, downwards pressure is assured. On a slightly brighter note, Indian volumes remain offline and port inventories
Find below the iron price table for March 8, 2013: I would expect some weakness today on China’s pretty average weekend data print. Though fixed asset investment was the shining light which might save things. Apologies for brevity and lateness this morning . Data issues. Regular programming will resume tomorrow.
Find below the iron ore price table for March 7, 2013: I expect the course of rebar will probably determine pricing from here. Meanwhile, the news today is all about price manipulation and it is the AFR that has the scoop: An executive at a Chinese mill reckons: “I think they must actually have some
From Reuters, BHP responds to China: “We aim to improve transparency by increasing liquidity in the spot market,” BHP said in a statement e-mailed to Reuters. “We sell significant volumes on a spot basis, including through widely accessible trading platforms, irrespective of the iron ore price,” it said. Spot market trades are used to set
Morgan Stanley has a useful note out today on the projected price of iron ore: The spot iron ore price likely peaked last month at US$159/t (62% Fe CFR) and, in our view, will trend lower over the remainder of the year. We are clearly not alone in this view – consensus forecasts for this quarter and the calendar
Fresh off the presses this morning comes this from Bloomie: A recent surge in iron ore prices was caused by changes in demand, market speculation and “unreasonable” pricing methods, China’s top planning body said. Chinese steelmakers re-stocked iron ore during the traditional “winter reserve” period and ramped up purchases as confidence in the economy improved,
Find below the iron ore price table for March 4, 2013: Whoa. Nasty fall in 12m swaps! The backwardation in that market is deepening on the well deserved medium term gloom. In broader news, honestly, has there ever been a more hated rally? Now we even have Australia’s mining-happy major business paper running dire forecasts
Find below the iron ore price table for March 1, 2013: The big news over the weekend was the Chinese move to suppress property prices. The measures are very much targeted at reducing speculation in exiting dwellings. Some have argued that this will shift investor demand to new homes. So, for the purposes of iron
Despite the weak official PMI today, there was one sub-component that disgorged napalm. The sub index for the steel sector jumped to 58.9 in February, from 49.3 in January and the internals are white hot: Check out the growth in new orders and new export orders. Inventories are up but not excessive and the same goes for raw
Find the iron ore price table for February 28, 2013 below: The big news overnight was that India iron ore continues its path of self-destruction. First, exports have now collapsed to about 20 million tonnes er annum (from 100 in 2010): India’s iron ore exports in the 10-month period of April to January of the
Find below the iron ore price table for February 27, 2013: Spot is stuck and swaps fell, perhaps as Cyclone Rusty moved away from Port Hedland. I’ve shifted to rebar average prices so forgive the series break. Anyway, it fell marginally on the day, as did rebar futures, though they seem to bottoming: I consider
The Bureau of Meteorology has a history of the effects of cyclones on Port Hedland and it makes fascinating reading if aiming to judge possible fallout from Cyclone Rusty on the iron ore port (h/t Failed Baby Boomer). Storm surge, it seems, has razed the town in the past. Find it below. The Pilbara coast experiences
The BOM just issued the following warning: TROPICAL CYCLONE ADVICE NUMBER 30 Issued at 5:36 am WST on Wednesday 27 February 2013 A Cyclone WARNING is current for coastal areas from Bidyadanga to Mardie including Port Hedland, Karratha and Dampier, and adjacent inland areas of the Pilbara, including Marble Bar, Nullagine, Millstream and Tom Price. A Cyclone WATCH
For February 26, 2013, iron ore spot was flat at $151.90 but 12 month swaps rose $2 to $122. Rebar futures also fell and have retraced the entire January rally: So still limited effects from Cyclone Rusty, which appears to be the slowest moving monster storm in the history of the world: ANZ is suggesting a
Rio Tinto has been placed on downgrade watch today by S&P: Global diversified mining group Rio Tinto’s leverage has increased beyond our previous expectations. We see a risk that Rio Tinto’s debt may rise further in 2013-2014, unless the company makes large disposals or iron ore prices stay well above $120/tonne CFR China. We are revising our outlook
Find below the iron ore complex price table for February 26, 2013: That’s bearish and for good reason. With the Chinese inventory draw down bottoming, plus its declaration that it will prevent rising house prices with obvious knock on effects for real estate development (which accounts for between 15% and 30% of steel consumption depending
All of the ore miners are up this morning despite sharp falls across the iron ore complex prices on Friday and more falls in early Chinese rebar futures trade this morning. The performance could be in anticipation of China’s Flash PM or, more likely, it is the path of Cyclone Rusty, which is headed for
Sorry this is late today. Find below the iron or price table for February 22, 2013: That’s looking rather like the restock is finally done. More downside for iron spot looks inevitable from here. P.S. Reader dexterbland has alerted to me the beasty in the below image which could hold things up a bit:
Find below the iron ore price complex chart for February 21, 2013: And the chart: So, a new high for the rebound despite falling swaps, flat Chinese steel prices and another largely weak day in rebar futures: My spread charts are still WAY out of whack: And the news overnight from the World Steel Association
From the AFR this morning the biggest job in Australian business has changed hands: BHP Billiton has appointed non-ferrous division head Andrew Mackenzie as its new chief executive, replacing Marius Kloppers as of May 10. The move comes after BHP reported the lowest interim underlying profits since 2005, but is unrelated to the fall in
Find below the iron ore price complex chart for February 19, 2013: Spot definitely wants a new high. Rebar was strong too by swaps are still stuck as rebar futures fell again. There really is no mystery to why the iron ore spot price has detached from other fundamentals. The FT today makes it plain: The
So, iron ore returns from holidays refreshed and ready to roll – higher. Here is the price complex chart for February 18, 2013: And the chart: So a new high in rebar spot for the move despite sharp falls in rebar futures across the curve (which had run on ahead). Iron swaps were unmoved but
Newcastle thermal coal prices fell slightly. The strike at Colombia’s Cerrejon mine continued into its second week with a resolution between Cerrejon, the Government and miners yet to be reached. Uncertainty over the strike, impacting about 30 million tonnes of thermal coal exports into the seaborne market, may have contributed to choppy trading over the past week. Meanwhile, coking coal spot
Still little movement in the iron ore price complex for February 15, 2013, a little fall in 12 month swaps is all: Interesting news this morning from Gina Reinhart’s banner iron ore project, the $10 billion or so Roy Hill. From the AFR: Gina Rinehart’s Roy Hill iron ore project no longer needs the 1700
No movement yesterday in the iron ore complex. The big news today is Rio’s earnings release (find it below) which confirms that the company is a ragingly successful iron ore company buried under a huge pile of…overmatter…to make it appear diversified and unattractive to suiters. The iron ore division contributed 44% of group revenue but…wait