The terrible Brazilian mining tragedy that has iron ore prices running wild is something of a Black Swan event for Australia. Iron ore prices are volumes for the year ahead will now be higher than previously thought so we must ask if this changes the path for an economy clearly on the slide. Goldman’s assessment
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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by Chris Becker Spot iron ore prices shot higher yesterday, making new highs as the fallout from Vale’s mine disaster continued to rattle markets. Texture from Reuters: China’s iron ore futures extended gains on Tuesday amid expectations of slower production by top producer Vale SA, but steel prices fell on caution ahead of the U.S.-China
by Chris Becker The iron ore complex jumped yesterday on the news that one of Vale’s Brazilian tailing dams collapsed, killing nearly 60 people and halting production at the Corrego do Feijao mine site. Dalian futures leapt 6% on the news, even though the production losses by Vale are not expected to be large to
by Chris Becker Spot and future prices lifted for iron ore yesterday, while rebar had the biggest gains as volume starts to simmer down leading into the Chinese new year: Meanwhile, BHP and Bluescope are blaming “high labour costs” in their bid to stop using Australian cargo ships to transport iron ore. More from AFR:
by Chris Becker Spot prices settled largely unchanged in the iron ore complex yesterday with 12 month futures pulling shorter as glut concerns mounted. Here are the latest prices and charts: Is there stimulus coming? Because there’s already a supply glut before the Chinese New Year holiday – more from Reuters: “There’s a big probability
by Chris Becker Spot iron ore prices were all over the place yesterday with lower grade fines lifting while higher quality dropped and the Tianjin spot price was broadly steady. Steel prices are going nowhere despite restocking efforts ahead of the Chinese NY holiday. Meanwhile, BHP signalled yesterday that it needed a “perfect second half”
by Chris Becker Here’s the latest from the iron ore price complex: Futures lept on the Dalian Commodity Exchange and in Singapore for the 6 month and 12 month respectively, while spot iron ore slipped. Looks like some more utilization as we get into the Chinese New Year. Texture from Reuters: “Our sintering data
by Chris Becker Friday saw a broad lift in spot prices and futures across the iron ore complex, taking into account Rio Tinto’s force majeure following a fire at its Cape Lambert export terminal and speculation that there maybe a resolution to the trade war between China and the US soon. Here are the prices and
by Chris Becker Spot iron ore prices fell slightly yesterday while the short and medium term futures edged higher alongside rebar and coking prices: Meanwhile Rio Tinto is out with a production update. Via AAP: Mining giant Rio Tinto shipped 338.2 million tonnes of iron ore from its Pilbara operations in 2018, in line with
by Chris Becker Here’s the latest price update from the iron ore complex, with spot prices up nearly 1% bringing the current rally close to a bull market response (i.e 20% plus) while Dalian futures also edged but the 12 monthly SGX price retreated: Aussie extractors are getting even better margins as the price keeps climbing
by Chris Becker Here’s the latest from the iron ore complex, where spot prices are steady while futures slipped a little: Capacity concerns in the Middle Kingdom are the focus for 2019, but it’s not moving prices around just yet. More from The Mercury: China’s steel industry will shift its focus in 2019 to optimising
by Chris Becker Here’s the latest price update from the iron ore complex: Some delaying news from WA with Rio Tinto disrupting some supply due to a fire last week at its Cape Lambert export facility. More here: A Rio spokesman said the mining giant had declared force majeure on customers impacted by damage to
by Chris Becker Friday saw the iron ore spot price climb a little higher while Dalian futures stepped back, rebar prices edged higher alongside Chinese steel prices: The steep rise in coking coal futures is due to a raft of inspections via state authorities in China. Texture from Reuters: Some miners in major coal mining
Iron ore prices for January 9, 2019: All soft. Bloomie carries some warnings: “The $75 a ton iron ore price is not sustainable for two reasons,” the Goldman analysts said. “First, part of the rally was fueled by mills restocking ahead of the Chinese New Year. Second, supply is set to increase in 2019.” Morgan
Iron ore prices for January 8, 2019: Everything flat. Clyde Russell is bullish now: Commodity markets appear to have delivered their verdict on China’s plans to stimulate its economy, betting that Beijing’s boost to infrastructure spending will work. China’s central bank cut the amount of cash that banks have to hold as reserves for a
Iron ore prices for January 7, 2018: Everything up again, as expected. This is the strongest seasonal period of the year. Rebar inventories have made the turn and Chinese iron ore port stocks are up again too. How far will the restock run is the question? Vertical Group is bearish: Expectations of Seasonal Restock Help
Iron ore prices for January 4, 2019: Everything was up Friday. This is typical seasonal restocking activity. Expect it to run for most of January. Beyond that I am bearish. China has not delivered enough stimulus yet. The steel PMI in December remains quite weak as does the steel price. CISA output for mid-December slumped.
by Chris Becker Here’s the latest prices with a slight uptick in spot prices, while futures are pushing higher, suggesting hope over forthcoming stimulus: The problem for the complex is the correlation to the Chinese PMI, which dropped into contraction territory in December for the first time in over two years. And unless Chinese authorities
by Chris Becker Here’s the first post-NY update to the iron ore complex, with prices as of yesterday: Texture from Reuters: Shanghai steel futures turned lower on the first day of trading for 2019 on Wednesday after disappointing data from China stoked investor worries about global economic growth. Prices of steelmaking raw materials also ended
Iron ore prices for December 21, 2018: Spot firmed. Paper fell. Steel bounced on some supply side shutdowns. Coking coal is still bulletproof. In news, Minas Rio is back: Anglo American (AAL.L) said on Friday it was restarting operations at its Minas-Rio iron ore mine in Brazil after months of closure, and had received regulatory
Iron ore prices for December 20, 2018: Spot up. Paper up. Steel up a little. Classic new year restocking now. It will run through to the end of January. There are still signs of stress under the bonnet, via Argus: Australian iron ore producer Fortescue Metals has narrowed discounts on its major products, as demand
Via the hedge fund Horseman Global: Your fund lost 1.32%. Losses on the long book where not compensated by gains in the short book and currency book. I started working for UBS Private Banking in Sydney on Valentine’s Day 2000. I still remember going to my first morning meeting and being introduced to the model
Via Platts: Samarco may restart iron ore pellet production activities as early as late 2019, and operate toward an 8 million mt/year rate during 2020, to meet high global pellet demand, the company said. Samarco will continue to use wet processing via floatation of iron ore, and aims to produce the same pellet grades as
Iron ore prices for December 14, 2018: Spot up. Paper up. Steel up. There’s nothing the iron ore Costanza market likes more than crashing Chinese demand data. That’s how conditioned it is to stimulus these days. My outlook is unchanged. Strength through new year and January then weakness as demand falls away. I don’t think
The world’s second largest economy has a problem. A big problem. Everything is slowing fast except the very thing that is wants to stop: building empty apartments! November data was bad. Industrial production slowed sharply to 5.4% and retail sales did as well to 8.1%. Fixed asset investment held up at 5.9%: Fixed asset investment