Iron ore price

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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Iron ore price volatility continues

Another wild day for the iron ore market with 12m swaps reversing spectacularly, spot showing less trouble and Chinese steel prices firming up.  So long as the rally in Chinese steel prices persists so too will the ore price. And on that front, the World Steel Association released its August figures today: Brussels, 20 September


Coking coal still falling

Courtesy of ANZ. Newcastle FOB October coal prices improved slightly to USD91.8/t. BHP Billiton boosted thermal coal production in its 2012 financial year, with record high output at two of its thermal coal mines in Australia and Colombia. BHP’s coking coal data was more bearish, with a large fall in earnings at its coking coal operations in 2012 due to


Coking coal dumped again

While we seem to have passed the short term nadir for iron ore prices, coking coal is still taking a battering. From ANZ: Newcastle FOB physical coal prices were steady around  USD91.1/t. Thermal coal markets appears to have based and  may find slightly better support as we enter the seasonally  strong winter demand period. We


Fortescue gets its rescue

From the AFR: Fortescue Metals Group has secured a commitment for a new debt facility of up to $US4.5 billion underwritten by Credit Suisse and JPMorgan that it will use to refinance its existing facilities and provide it with additional liquidity. …Fortescue said the earliest repayment date for any of its debt is now November


Daily iron ore price update

Whilst I spent Friday with most folks thinking QE3 would have a limited impact on iron ore, so far we’re all wrong. The Fed launched ore into another spectacular bounce: Which, as you can see, did absolutely nothing for Chinese steel prices: I have absolutely no idea what comes next in these crazy markets but


Dark thoughts on Fortescue

Alphaville continues its excellent thoughts on Fortescue this morning: Trading halts are a feature of the Australian stock market in the way they aren’t in the UK, where they are rarely granted for companies on the official list. (Reverse takeovers are the main exceptions.) That can be a positive but also a source of frustration. Take


AFR: Fortescue to get debt relief?

The AFR is reporting that: Fortescue Metals Group has entered a trading halt after having progressed discussions with its lenders about relaxing some of its debt covenants “significantly overnight”. It expects to make an announcement about a restructuring of its bank facilities before the start of trading on Tuesday. Wonder what ore price assumptions the


Will QE3 inflate iron ore?

Here is yesterday’s iron ore price action: And the charts: Definately feeling like a dead cat today. More interesting, however, is the question of whether bulk commodites will enjoy a boost from the monetary push coming from QE3. It has not been easy to judge in the past whether this is the case. My feeling


Coking coal contracts settle at $170

Courtesy of ANZ: Newcastle September coal futures slipped 0.3% to  USD90.70/t, while coking coal shed 2.5% to USD148.75/t.  Q4 coking coal contract negotiations have been completed  between BMA and Nippon Steel, with the price settling at  AUD170/t. Although this is an AUD55.00 decrease from Q3  contract prices, the USD20 premium to spot prices was in


Iron ore price weakness set to resume

Yesterday ANZ had an interesting conference call about iron ore, China and Australia. The economic legs were all a bit sunny and happy but the iron ore dimension was very good: 2. MARK PERVAN, HEAD OF COMMODITY RESEARCH Thoughts from China General mood very cautious, key export province Guangdong seeing activity down as much as


Iron ore price cracks the ton

And there you have it! Iron ore raises its bat to the crowd and the dressing room, cracking the ton! And the charts: And Chinese steel following through: Adding to the joy, China’s steel output fell materially in August, down 4.9% to 1.89 millions tonnes per day in August from 1.99 million tones per day


Are exports to China set to jump?

By Leith van Onselen An interesting piece of information arising from yesterday’s Chinese data dump was the increase in imports from Australia, which grew by 10.9% in the month of August and by 2.9%  over the year. A chart tracking Chinese imports from Australia (in USD) against Australian exports to China (in AUD) is shown


Coal projects get the chop

This afternoon coal major Xstrata announced a bunch of job cuts in the face of ongoing falling prices but more interesting was the following part of the release: Although we are not breaking down the reductions by individual site, the restructure is focused on scaling back high cost production at some of our mines. We do


Coking coal falls heavily

We may be seeing the beginnings of a bottom for iron ore but the same can’t yet be said for coking coal. From ANZ: Spot thermal coal fell 2.3% to USD86.37 last week, while coking coal shed 5.4% to USD153.20/t. Coking coal prices continue to drift lower as buyers stay on the sidelines awaiting the results of Q4


An iron ore squeeze

It’s an eye-popping iron ore table today: So, the exuberance of last week finally seized parts of the steel complex with 12 month swaps hitting the proverbial afterburners. Up 9.1% on the day! And who said there’s no speculation in the iron ore markets? Spot followed with a solid climb: Needless to say, with the


Iron ore price stabilising?

It’s all good today! Not much movement overnight in the steel complex but enough to suggest that the big falls are behind us. 12 month swaps are starting to price with some consistency in the mid $90s range: There is also clearly a lift in broader sentiment as Draghi applies his band-aid and although it


Macro Investor: Shorting iron ore

Iron ore prices (as measured by 62% fines) have fallen over 50% from their peak at almost $200 per tonne, after doubling twice from early 2009. This dynamic is due to collapsing demand, as inventories in China climb to new heights amid increasing volume output from Chinese, Australia, African and Brazilian suppliers. …Due to the


Steel glut versus more trains

Steel industry in China is now known to be unprofitable.  Profit margins are close to nothing, while production capacity is high.  Meanwhile, banks have to roll over their debts, apparently, to keep them alive.  However, production has not really slowed down much despite clearly slowing demand.  Worse still, and interestingly (although not surprisingly), we learned yesterday that the steel


Iron ore volumes showing the pain?

Yesterday Port Hedland released its August shipping statistics including iron ore tonnages, which looked like this: Not bad but closer inspection throws up a few worries. August tends to be a down month but this year the fall is 9.3% versus half that in the previous two years. Volumes tend to be highest mid year


The iron ore dominoes

By David Llewellyn-Smith First up, yesterday’s iron ore price moves, which are not pretty: So, a new low for spot, 12 month swaps rolling over and Chinese steel prices still weakening. Complimenting the price action, the international interest in iron ore ramped up again last night with more bearish analyses.  The first story of interest