Via the AFR: China has slapped a ban on Australia’s biggest grain exporter – a co-operative with about 4000 farmer members – after claims customs authorities found pests in a shipment of barley. China customs suspended barley imports from CBH, based in Western Australia and run by former BHP iron ore boss Jimmy Wilson, on
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 prices for August 31, 2020: Prices are still strong but the China steel PMI is fading, down 47 headline and 45.6 new orders: New exports orders are disastrous at 35. There were flood disruptions. But overall, we are back at levels I would normally associate with price deflation. Property sales still look fine:
I’ve been arguing this week that both Twiggy Forrest and Gina Rinehart would be wise to consider a float of their respective iron ore businesses in the near future. The reason is straightforward. The iron ore trade is at a cyclical high just as Chinese global relations are undergoing a structural deterioration as Beijing launches
Iron ore prices for August 26, 2020: Spot up. Paper up more. Steel has not updated. Chinese daily empty apartment sales are still fine: Brazil is still sick: And there is much more Chinese restocking to do. That said, my earlier worries about rebounding Vale volume are resurfacing, via Bloomie: By at least one measure,
Iron ore prices for August 25, 2020: CISA steel output remains huge: As empty apartment sales rise: More: In other news, there was a mysterious crash in Australian exports in July, at the AFR: Iron ore exports to China fell 12 per cent or $1.11 billion to $8.12 billion, while coal exports to the country
Via the FMG true believers: Sitting atop a cash machine disguised as Australia’s third-largest iron ore miner, Fortescue Metals Group chief executive Elizabeth Gaines was justifiably emphatic about the importance of Australia’s increasingly testy trade relationship with China. “We can’t lose sight that we are a trading nation,” she implored, adding that the miner “didn’t
Iron ore prices for August 24, 2020: There are port problems that are clearing: The China Iron and Steel Association (CISA) said on Tuesday that iron-ore discharging difficulties and port congestion issues are likely to ease in mid- or late-August as the weather improves and the coronavirus is under control. This is old news but
Via FMG this morning It’s halftime in the MB versus Twiggy great game. We won the first quarter up to 2015 as FMG nearly went under. Twiggy handed us a toweling in the second quarter as FMG rebounded thanks to a fantastic string of good fortune in Chinese rationalisation, Brazilian accidents and global pandemics. But
Iron ore prices for August 22, 2020: Most measures down. I’ve dropped SGX. It’s become little more than the Dalian dag. Port inventories lifted to new highs but they have 30mt to go. Steel mill must be hurting on margins, though it does not matter given their policy role now. Empty apartment sales still booming
According to BofA: Foreign firms looking to move their manufacturing processes outside of China in the wake of coronavirus could face $1 trillion in costs over five years, according to new Bank of America research. However, the bank argues that such a move would likely be beneficial for companies in the long term. Even before
Via Yahoo: With iron ore markets tight and margins at astronomical levels, Vale SA (VALE) has announced that its board of directors have approved the implementation of the Serra Sul 120 Project, in Canaã dos Carajás, Brazil. The Serra Sul 120 Project consists of increasing the S11D mine-plant capacity by 20 Mtpy, which will total
by Chris Becker Spot prices slipped yesterday with the Tianjin price down over 1% while Dalian futures were also volatile in morning trade before recovering alongside other assets in China in the afternoon: Meanwhile, according to Metalminer China is expected to drive a surge in scrap imports, due to a recent relaxation of scrap import
by Chris Becker Iron ore spot and future prices rose yesterday, but Dalian exchanges were volatile, falling more than 3% before recovering with a mild loss. Rebar and coking coal were steady as Bank of America lifted its forecasts for iron ore, adding to the chorus of analysts who see rosy futures for the supply
by Chris Becker Spot iron ore prices leaped over 2% yesterday while 12 month futures were marginally higher as the Singaporean exchanges reopened, the Dalian exchanges and rebar prices slipped as US/China tensions continued to boil over: Meanwhile, the perennial prick, malcontent and literal deadweight Clive Palmer is up to no good again, wielding his
by Chris Becker The iron ore complex is having a mixed start to the week due to the Singaporean holiday, with spot prices and 12 month Singapore futures unchanged, while Dalian futures dropped on increased US tensions: Westpac are still moderately bullish with a $100US per tonne forecast, but see a decline down to $87
Iron ore prices for August 6, 2020: Spot scorcher. Paper too. Steel is muted but OK. OK, so get this: Rising car and excavator sales in China further buoyed sentiment, analysts at Beijing-based Sinosteel Futures Co Ltd said in a note. “Good car sales data shows that domestic demand is improving, and excavator sales also
DXY is struggling to hold support: The Australian dollar scorched everything in sight: Gold mania: Oil flamed out: Metals mania: But a GLEN shocker landed on miners: EM stock breakout: Junk fine: Yields squashed: Stocks mania though not Europe (or Australia): The only chart that matters mattered: Not much happened, via Westpac: Event Wrap US
Not that this matters much for the deficit, which is now irrelevant, but it will matter to the Australian dollar. Via the AFR: Glencore is working on plans to slash output from Australian coal mines in response to weak prices, in a move that will reinforce the Swiss miner’s reputation as the most active manager
Iron ore prices for July 31, 2020: Spot stable. Paper up. Steel plodding along. The Chinese Steel PMI was out and it wasn’t great: That’s some meh levels that do not justify today’s prices. But that only strengthens my notion that this is a policy-driven rally with steel mills pumping the stuff out purely to
With the sheer enormity of the COVID19 pandemic’s economic impact only starting to dawn, David Llewellyn Smith and Leith Van Onselen spoke with Gunnamatta on the major forms the shock has taken through the Australian economy. Over the course of about 75 minutes (3 parts) they cover the ugly numbers and the dynamics across
Iron ore prices for July 31, 2020: Vale released its results and claimed to be on track to meet its volume guidance. Via Bloomie: “Following the reduction of uncertainties related to the pandemic, with risks of a second wave in China mitigated and the stabilization and decline in COVID-19 cases, especially in the northern states