Iron ore price charts for September 6, 2017: Tianjin benchmark fell 30 cents to $77.20. Paper was down again. Steel has not updated. We’re dancing on a pin head here. No changes to the outlook.
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Daily iron ore price update (pin head)
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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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6
Big Sleazy breaks to new lows
Dalian is trying to rebound: BHP is still nudging breakout: Big Gas continues its re-rating with exporters down and the domestic gougers flying: All I can say to that is, what a pack of bloody idiots we are. Big Gold is powering, working beautifully as portfolio insurance. I’m still a seller here for the short
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Daily iron ore price update (stall)
Iron ore price charts for September 5, 2017: Tianjin benchmark rose 30 cents to $77.50. Paper fell sharply overnight. Rebar is at new highs. Retuers has texture: China’s iron ore futures dropped on Tuesday for the first time in four sessions after a fire at a government-owned steel mill raised concerns that planned safety inspections may
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Chinese steel mill reform drawing to a close
At last some clarity on the Chinese steel sector reform that has so disrupted the market his year. Via Macquarie: China commodities trip: Update on government policy and steel At the start of this year, we highlighted that Chinese commodity demand would be intertwined with government policy in 2017. Government intervention has stepped up
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Big Sleazy tries to rally
Dalian still down: Big Iron flat a with BHP pushing hard at break out: Big Gas is weak, except Santos which is re-rating as the government sticks its head in its energy arse: Big Gold is on fire. I’m still a seller into strength on the basis that the DPRK will fade and USD is
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Daily iron ore price update (congestion)
Iron ore price charts for September 4, 2017: Tianjin benchmark jumped $1.40 to $77.20 which was catch-up really. Paper fell overnight. Steel has not updated. We’re seeing a little price congestion now but I still can’t see falls for a couple of months yet. With reform keeping steel margins so high, it’ll take a clear
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Sleaze Bank opens ASX trap door
Dalian has opened OK: So too Big Iron with BHP and RIO nudging break outs: Big Gas is stable, more than can be said for pensioner energy bills: Big Gold is powering. I’m still a trading seller into this strength. DPRK tensions should fade: Sleaze Bank has opened a trap door: And is rapidly approaching
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Where is all that Chinese steel going?
Some more today on the recent rocket ship of Chinese steel new orders, from Macquarie: Data from the China Federation of Logistics & Purchasing (CFLP)1 show that activity in China’s steel sector expanded at its fastest pace in August since April 2016, with the steel PMI index rising to 57.2 from 54.9 in July.
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Daily iron ore price update (full blown boom)
Iron ore price charts for September 1, 2017: Tianjin benchmark was unchanged at $75.80. Paper ripped overnight. Steel is hovering at the highs. Port stocks were basically stable. The thermal coal restock appears to be easing. CISA mid-August output at major steel mills was insane as induction mill closures swing some 40-50mt of production into
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Ian Narev has killed the stock market
Dalian is still running: Big Iron is down as it goes ex-div: Big Gas is running too. The two pensioner rorts, STO and ORG, are re-rating I reckon. The market does love a rent-seeker: Big Gold loving it. I’m still a seller here on the basis that the USD fall is (largely) done: Sleaze Bank
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Daily iron ore price update (becalmed)
Iron ore price charts for August 31, 2017: Tianjin benchmark rose only 40 cents to $75.80 and is becalmed versus the hysterics at Dalian, which took off again yesterday. Steel fell. Coking coal is up again. Thermal appears likely to have topped. Yesterday’s steel PMI showed the boom runs unabated: New orders are bonkers. We’ve
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China steel PMI melts up
The China steel PMI is notoriously volatile. It is perhaps therefore a better directional indicator than it is an absolute reading on conditions. Nonetheless, today’s version is off its face at 57.2 with new orders rocketing to 66.6: Stock inventories are still drawing as well though raw materials are rising. The non-manufacturing PMI suggested a
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Macquarie upgrades iron ore, Straya
Via Macquarie: Data released since the start of the year shows the outlook has improved markedly since the end of 2016. Rising business confidence is driving job creation and providing a key support to household income and consumer spending while wages growth remains weak. In 2017, we expect 1.8% GDP growth followed by 2.2%
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Daily iron ore price update (meh)
Tianjin benchmark dropped 70 cents to $75.40. Paper stopped the fall last night. Coking coal too. Steel is still hovering at the highs. No change. Volatility for another month or tow then down.
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Sleaze Bank plunges on
The ASX is flat flat today, sitting right at the bottom of a scary descending triagle: Dalian is down again: Big Iron is mixed. BHP approaching break out: Big Gas and the pensioner gouge roar on: Big Gold too: The Big Sleaze can’t stop falling. Perhaps Narev has to go?
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Daily iron ore price update (paper burn)
Iron ore price charts for August 29, 2017: Tianjin benchmark was down 40 cents to $76.10. Paper burned overnight, especially for coking coal. Steel has not updated. Paper is clearly falling faster than physical so the latter obviously has ongoing tightness. That said, if coking coal capitulates as its supply disruptions pass then the iron
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North Korea shoots down ASX
Break! XJO has just seen its symmetrical triangle break down the wrong way. It’s taken out the 200DMA to boot: This clearly opens the way for lower. Thanks DPRK! This should still lead absolutely nowhere in terms of North Asian conflict. Japan and US have requested a UN Security Council meeting. But we’ve yet to
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Daily iron ore price update (volatility)
Iron ore price charts for August 28, 2017: Tianjin benchmark fell only 20 cents to $76.30 after futures dropped much further. Paper firmed overnight. Steel is stalled. We definitely appear to be getting bogged down at these levels across the complex. Iron ore has recently reacted to the weak USD but not now. CISA output
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“Sleaze” Bank stock sinks with its reputation
Jonathon Tepper has a new name for the CBA: And investors are voting with their wallets, hitting new lows: The chart still suggests no support right down to $70 and with the politics getting worse who knows? The under-performance is worsening but the whole sector appears increasingly tarnished: Meanwhile today, Dalian has managed to ease
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Daily iron ore price update (bullish ports)
Tianjin benchmark was unchanged at $76.50. It feels toppy given paper has rallied more. The latter was slain Friday night. I couldn’t find any trigger so perhaps it’s just profit taking. The two coals are still very high. Chinese steel mill profitability is still insane despite the bulk rally. Port stocks fell another 1.75mt to
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More on iron ore supply cuts
Via Macquarie: Non-major iron ore slips on Indian summer: Iron ore numbers reveal a marked slump in nonmajor, seaborne supply as India remains largely out of the seaborne market. Despite a sharp uptick in prices during July, Chinese imports from non-major supply, a very price elastic segment of the market, fell to 10.3 Mt,
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Daily iron ore price update (confusion)
Iron ore prices for August 24, 2017: Tianjin benchmark sank 90 cents to $76.50. Paper firmed overnight after a late sell-off yesterday. Coking coal is off to the races on more temporary supply issues in QLD and Chinese restocking. So long as it runs we can’t say iron ore is done. The main source of
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Terror Bank breaks
Dalian is warming up again today: XJO is up too as its symmetrical triangle narrows: With Big Iron powering, it would seem that the odds favour an upside break from that pattern: Big Gas also appears constructive as it ravages east coast pensioners: And Big Gold looks positive too as it climbs: But holding it
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More on the sudden iron ore shortage
Via Credit Suisse: Iron ore supply deficit to China continues – steel demand accelerated. It is probably fair to say that almost every commodity analyst looking at the seaborne iron ore market over the last few years has calculated that the iron ore market is in over-supply and getting worse. But we have all been
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Daily iron ore price update (still hot)
Iron ore price charts for August 23, 2017: Tianjin benchmark fell $1.40 to $77.40. Paper firmed overnight. Steel fell sharply. From Reuters: Steel and iron ore futures in China fell about 4 percent on Wednesday as a selloff in steel dragged down prices of the steelmaking raw material, cutting short a rally that lifted iron