From the ANZ today: Rallying oil markets potentially supported sentiment for thermal coal, but firmer physical iron ore prices were likely driven by strength in paper markets. Iron ore swaps (IOS) andShanghai rebar futures posted another day of gains across the curve. However, we think near-term gains could be short-lived, with Baltic capesize freight rate declining
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 July 1, 2013: Rebar futures were also flat. In news, BHP has announced accelerated automation in the Pilbara: BHP Billiton is speeding up the modernisation of its Pilbara iron ore division, with efforts to reduce spending on contractors coinciding with the launch of a high-tech remote
From ANZ today: Bulk commodity prices improved on Friday, but ended the week softer. Iron ore prices have settled around the USD116/t level in line with a pick-up in Chinese steel prices and Baltic capesize rates, which were up another 18.8% last week. However, the mood is still cautious in China as rumours of ongoing
Find below the iron ore price table for June 28, 2013: And the charts: And rebar: The spreads are all normal: Chinese port inventories fell marginally last week to 74.9 million tonnes. And steel inventories remain very high. Which is where we find a little news flow with daily steel production rates still not falling.
Find below the iron ore price table for June 27, 2013: Some strength returned to iron ore and swaps clearly: But rebar has slumped below last year’s low now and shows no sign of reversing: Probably not as inconsistent as it appears. The iron ore restock likely persists, as does weak Chinese steel fundamentals. Expect
This story has been floating around since yesterday and I thought I had better address it: AUSTRALIA’S coal industry is at “a tipping point” and will survive only if government gets off the back of miners, Anglo American chief Mark Cutifani has warned. Mr Cutifani said 9000 mining jobs had been lost in Queensland and
Courtesy of ANZ: Physical iron ore prices fell another 2.2% to USD114/t, despite mixed performances across the Chinese rebar steel futures and iron ore swaps curve. Moves by the PBoC to ease tight liquidity conditions saw the recent sharp losses in Chinese equities (SHCOMP index) ease back, which supported sentiment for industrial commodities. Iron ore
The Bureau of Resource and Energy Economics (BREE) is out with its quarterly commodity forecasts and as I’ve noted before the tendency of the Bureau is towards optimism (making our pathologically positive PM proud). As a result it has had to slash its projections for the financial year just ending: The net result of actual
Find below the iron ore price table for June 25, 2013: As you can see, the iron ore market is weakening across the board. Rebar futures rose slightly. As did weekly Chinese iron ore port stocks, including those source from India. The reason is simple. From Iron Ore Team: Spot iron ore prices are likely
Courtesy of ANZ: Bulk commodities declined, despite a 1.7% increase in Baltic Capesize freight rates and slightly higher Chinese rebar prices on Friday. The bearish sentiment from China’s weaker than expected flash PMI read and squeeze in credit availability weighed on steel demand for bulk commodities and associated prices. Physical iron ore prices declined 1.7% to
Readers will know that all of the major miners are currently aiming to divest assets as a way of bolstering their balance sheets. BHP managed to offload a stake in its emerging Jimblebar mine last week. But the two buyers were already joint-venture partners in the project. Since then we have had confirmation that Fortescue
Find below the daily iron ore price table for June 21, 2013: I wouldn’t call and end to the rally yet. And the charts: Our spreads remain at appropriate levels: And rebar is still struggling badly: There was some hope from China with positive rhetoric from Hebei. From the Iron Ore Team: Iron-ore prices have bottomed
Charts returning Monday. Yesterday’s iron ore price is an impressive 60 cents rise to $120.60. 12 month swaps rolled over to be down slightly at $113. Rebar average was flat but rebar futures fell. A very strong performance in the circumstances illustrating that a restock is definitely supporting the market in the short term. Be
From ANZ: Physical iron ore prices firmed 2.0% to USD120/t. It was another positive day for iron ore swaps (IOS), with prices rising again across the curve. SHFE rebar futures also firmed, with the most active Oct13 contract up 1.3% to RMB3,526. IOS prices pushed higher amid reports of firmer physical deals and ongoing gains in the Baltic capesize index.
A good story today from BRW: Allan Ruming has watched Mackay’s fortune unravel at close quarters. As mining companies slash spending in the face of falling commodity prices, the revenue of his engineering company will plunge from $7.4 million to $2.4 million this financial year – and $1.9 million of that came in the six months to December. “It
Cross-posted from Kate Mackenzie at FTAlphaville. That’s from Deutsche Bank today. We joke, we joke. A little. Deutsche had of course already joined the commodities-supercycle-is-dead chorus, and this note is not from the commodities side but by Asia chief economists Taimur Baig and Jun Ma. Ma, who covers China, wrote an interesting and widely-read note about China’s pollution
Courtesy of ANZ, who got their call on the iron ore bounce this week just right: Physical iron ore prices rose 1.2% to USD115/t. Iron ore swaps firmed across the curve, in line with physical prices. The most active Jul13 traded USD2.75 higher to USD114.92/t (hit a high of USD115.75/t intra-trade). Oct13 SHFE rebar futures
Still got some technical issues today but iron ore rose one percent or so to $112, which is better than I’d feared. However, pressure will remain with Shanghai rebar dropping further to 3,386 yuan. CISA reported yesterday that Chinese steel production cuts have begun in earnest, down 4-5% in late May from mid May. More to
Having some technical issues today. Below is an IG table with iron ore at the bottom. Still no change on Chinese holidays. ANZ is out suggesting a short term bounce may be in the offing. That’s a brave call given the deteriorating context but the overall assessment is useful: Bulk markets look oversold, but face
Ernst and Young has a new risk report out that is unsurprising but nicely summarises the state of mining: The twin capital dilemmas of capital allocation and access to capital have rocketed to the top of the business risk list for mining and metals companies globally, up from number eight in 2012. These capital dilemmas
Find below the iron ore price table for June 11: Not movement as China remains on holiday. The 12 month swaps continues to cling impressively to $108-10. In news today, Macquarie Bank brings hope. From Bloomie: The commodity used to make steel will fall for another four to six weeks until China’s stockpiles bottom out