Via Shanghai Metals Market: Downstream producers of the nonferrous metal industry in China have announced to postpone their resumption after the Chinese New Year as the government extended the seven-day CNY holiday due to the novel coronavirus outbreak. Most smelters, however, continue to produce during the holiday, and logistics and warehousing enterprises keep most of
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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Last week I noted some of the craziest equity price action I can recall in FMG as it soared while the coronvirus crisis mushroomed. Now the blowoff is over: Today’s production report shows where the enthusiasm was coming from: That’s a cool $8bn in gross profit. Trading on a rough forward P/E of 6x. Problem
SGX twelve month swaps keep on falling, down to $72.57 yesterday: Other news is more price supportive, via Platts: Market sources said they had heard of two rail disruptions in southern Brazil due to heavy rainfall, which could further disrupt exports. A company source from Vale, however, could not confirm the news. “The company will
SGX that is. Hammered again yesterday to $73.64: Coronavirus damage estimates are mounting, via Platts: “The concentration of the virus in China, the strong growth of Chinese steel production/exports since 2003 are likely create a demand vacuum across the region,” Jefferies’ Australia-based analysts Simon Thackray and Abraham Akra said in a note. “We believe, inventories
Oh dear, at Reuters: Tangshan, China’s largest steelmaking city in northern Hebei province, announced on Tuesday morning that it is suspending all public transit within the city in an effort to prevent the further spread of the new coronavirus. Hebei province produces some 300mt of steel per annum, a lot of it in Tangshan. It
China is closed so there’s not much to update but those hoping the virus won’t impact iron ore had better take a look at SGX futures, which are trading: The damage is less further out the curve, which makes sense, but expect this to get worse before it gets better. Meanwhile, from Global Steel: Global
Iron ore charts for January 23, 2020: Spot smacked. Paper too. And steel. Markets appear to be closed now for Lunar New Year having priced virtually no coronavirus fallout. Good one. The damage is coming. Via Reuters: “The spreading coronavirus in China is raising concerns that the busy construction period following the Lunar New Year
Iron ore price charts for January 22, 2020: Everything ended roughly stable again after falling in the morning. Reuters has texture: “People are becoming increasingly worried about this virus outbreak, which may disrupt many businesses,” said Richard Lu, senior analyst at commodity consultant CRU Group’s Beijing office. The virus has spread from the central Chinese
Sure looks like it: I’ve so far been wrong on the stock but the iron ore outlook is not improving as FMG reaches for the stars, up 3% today: 58% is already heavily discounting; the base case is the three majors are returning 40-50mt this year; Chinese property is slowing; Coronavirus! A SARS-like shock will
Iron ore price charts for January 21, 2020: Everything stable. Bloomie sums it up for me: Vale, a critical piece of the steel ingredient jigsaw, won’t report fourth-quarter production until February, but third-quarter output was already up 35% on the previous three months, and the Brazilian giant could return to pre-Brumadinho levels by 2021. All three of
At the AFR: Upgrades to the economic outlook for Australia’s two largest trading partners are another two more red crosses in Philip Lowe’s “cons” column as the Reserve Bank governor weighs up the wisdom of cutting rates to fresh lows. …Treasurer Josh Frydenberg would be also pretty pumped up as well, given expectations of a
Iron pre price charts for January 16, 2020: More Vale ructions: Brazil miner Vale SA VALE3.SA has halted the tailings operations at the Esperança mine, which it acquired from Ferrous Group last year, according to a statement on Thursday. Vale cited the need to do a technical evaluation and potentially carry out work to improve safety at
Iron ore price charts for January 15, 2019: Spot fell. Paper is firm. Steel treading water. Chinese port inventories of ore fell to 127.9mt last week. This is marginally bullish given it has heppened during price strength. The excitement raised by Tropical Cyclone Claudia is over: Prices are very high. Barring another storm they will
Iron ore price charts for January 15, 2019: Spot is strong. Paper following. Steel is is OK. This is perfectly normal for this time of year: Iron ore imports in December boomed on seasonal restocking, hitting 101.3mt the thrid highest ever and enough to finally flop into the positive on the rolling annual for a
by Chris Becker The iron ore complex reopened over the weekend with modest upticks on both spot and futures prices, although rebar finally slowed down a little: Meanwhile, Rio Tinto is still digging away with a big project announced yesterday for Monadelphous and Lycopodium, who’ve been contracted to design and construct Rio’s Western Turner Syncline
by Chris Becker Friday saw a dip in spot prices alongside futures but rebar and coking coal markets continue to heat up: Meanwhile, the Baltic Dry Index has finally stopped falling on Friday: The Baltic index, which tracks rates for capesize, panamax and supramax vessels that ferry dry bulk commodities, increased 2 points, or 0.3%, to
by Chris Becker The iron ore complex inverted yesterday with spot prices and short term Dalian futures falling back while the Singapore long dated futures rose as the restocking meme slowed down: Port Hedland is fast tracking the wealth out of the country with record exports, surpassing half a billion tonnes again in 2019. From
by Chris Becker Spot iron ore prices continued their New Year rally while long dated futures markets moderated as the restocking meme continued apace: Meanwhile the Indian iron ore industry is desperate for their government to remove export duties as they find they can’t compete with the Chinese cheap market: It complains that iron ore
by Chris Becker The iron ore price complex had a slight breather yesterday as spot prices lifted slightly alongside futures as the major steelmaking city Tangshan lifted its second-level smog alert, helping boost demand as controls are eased. The stupidly composed Department of Industry, Innovation and Science recently released its forecasts (dart boards size not
by Chris Becker The iron ore complex started the new year in a complicated style yesterday with spot iron ore and Shanghai steel futures retreating despite a big monetary policy goosing by the PBOC to help spur on economic growth. Longer dated futures did better, although rebar took a hit as well as inventory levels
by Chris Becker Iron ore was the best performing commodity across all markets in 2019, with both spot and futures ending the last trading day of the year higher. It’s all about demand, although the Vale roadblock of supply has not yet been filled in, Chinese crude steel output continues to climb with nearly a
by Chris Becker Iron ore benchmark prices and short term futures retraced a little to finish relatively flat on Monday as concerns over upcoming January pollution restrictions mount in the short term, while longer dated steel futures remain well supported. The Tianjin spot price gained a little, and looks set to finish up well over
by Chris Becker Thin trading over Christmas coupled with the lifting of anti-smog measures has seen the iron ore price rise going into the new year, with Tianjin spot up to $91.55 while Dalian futures are up over 1%: Meanwhile, seaborne iron ore deliveries have spiked again after production curbs were lifted. From Hellenic
Iron ore price charts for December 23, 2019: Spot held on. Paper is soft. Steel is beenfiting from pollution controls. Coking coal is weak. Spot price were hovering around $130 a week ago. Futures are now pricing that out for a year. Thermal coal is soft in the low $60s. Combined, these are roughly 20%
Iron ore price charts for December 20, 2019: Spot was hit. Paper rallied. Steel has not updated. World Steel is out for November: World crude steel production for the 64 countries reporting to the World Steel Association (worldsteel) was 147.8 million tonnes (Mt) in November 2019, a 1.0% decrease compared to November 2018. China’s crude