Courtesy of ANZ. ANZ Commodity Daily 712 260912
0
Commodities daily
Primary Section
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.
Also Check – Australian Dollar
Find below our daily feed of market analysis
0
Daily iron ore price update
The bulk prices were pretty steady yesterday:
0
The bad news bulks
Courtesy of ANZ: Newcastle front month futures prices declined to USD87.2/t dragged lower by negative demand sentiment for energy related assets. Iron ore did not fare much better, falling 2.5% to USD103.7/t, while Australia FOB coking coal prices also declined by USD1.42 to UDS146.79. Slower steel demand growth in China and Europe has created a surplus in Asia, weighing on prices.
1
Daily iron ore update
Yesterday’s iron ore prices show continued consolidation: I’m not sure we’re going to see much more upside here in the near term. The decision by India yesterday to limit some iron ore exports seems to have little effect on the market. Such news used to send the price up 20% or more. Here are the
1
The short story of a loss-making Chinese steel firm
Remember Baosteel, which had a new steel project approved by the government, and the construction of the new plant started, then stopped? The reality that the steel industry has a little problem of overcapacity is no secret. With absurdly low profit margins as the slowing economy combines with high financial leverage. A few years ago, Baosteel acquired a plant at Loujing
0
Commodities daily
Courtesy of ANZ: ANZ Commodity Daily 710 240912
0
Daily iron ore price
Friday saw the ore price end the week on a soft note: Not much to add except to say that the 12 month swap looks reasonably priced at these levels given the outlook: Chinese steel prices took a breather: And there is still no real drawdown on Chinese port inventory:
1
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
2
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
1
Daily iron ore price update (TSIPIO62 Index)
Yesterday’s iron ore price action was of the consolidation variety: But Chinese steel prices continue to improve:
0
Commodities daily
Courtesy of ANZ. ANZ Commodity Daily 708 190912
48
Iron ore price bottom is in
In some good news for the Australian economy, it looks like the medium term bottom is in for the iron ore price: That’s an encouraging table with the entire steel complex on the up. Here are the charts: My retest of the lows looks to have already happened and moved on. Indeed I think it’s
3
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
18
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
11
Daily iron ore price
The rally continues, this time in Chinese steel prices as well: And the charts:
0
Commodities daily
Courtesy of ANZ. ANZ Commodity Daily 706 170912
4
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
0
Commodities daily
Courtesy of ANZ. ANZ Commodity Daily 705 140912
12
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
8
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
6
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
0
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
1
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
1
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
1
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
4
Iron ore price rockets
Kaboom! Up she goes across the board with follow through also in Chinese steel. The charts for ore look like this: The charts for steel like this: Looks like the bottom is on, more or less. Still reckon we’ll see a retest. And in the medium term I hope we heed the warning of the
54
Fortescue blazes the trail of denial
From the AFR this morning: Packer family lieutenant Ashok Jacob, who runs fund manager Ellerston Capital, has likened the rise and fall of the iron ore price to the boom and bust of technology stocks and Japan’s 1980s bubble economy. …“You are not going to move on to a new glorious outcome in terms of commodity
6
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
2
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
3
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