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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Find below our daily feed of market analysis


Iron anvil falls on Sundance

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


Coking coal restock done

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


Rio cuts (but what?)

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


Daily iron ore price update (Nev powers back)

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


Commodities daily

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


CBA makes hay with the mining bust

Late yesterday, CBA produced a note with the combined resources of its economics, commodities, currency and equities teams that argued that: With commodity prices off recent highs a question is being asked is, “Is the resource boom over?”  We put that question to CBA’s Economics, Currency,Commodity and Equities research teams. They conclude that the resource boom is a


Traders push thermal coal rally

Courtesy of ANZ. Newc FOB physical thermal coal and Australia FOB coking coal prices firmed last week, with Asia demand showing signs of improvement for early next year loadings. Reports suggest traders were covering their short positions before closing their books or the year and ahead of Xstrata’s annual negotiations with Japanese utilities for thermal coal contracts starting in January. Reports


Daily iron ore price update

Iron ore continued to edge higher yesterday, perhaps helped by the resolution of Chinese leadership: Not much more to say today but came across the following classic from Creamer’s Mining Weekly: While iron-ore prices appeared set to make a partial recovery, they would remain volatile, as revised Chinese growth targets and performance were likely to result


Thermal and coking coal price rally persists

Courtesy of ANZ: Newc thermal coal futures posted stronger gains overnight. Now that China’s 18th National Congress leadership changeover has ended, we could see growth momentum pick-up. However, gains will be capped by excess Chinese coal inventories (sitting around 30 days of supply). Iron ore prices were flat around USD122/t, as China spot steel and rebar futures markets were subdued, but