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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Daily iron ore price update (falls coming?)

The ferrous complex was bizarre on March 31, 2002: The unprecedented dislocation between spot and futures continues with the latter much higher than the former. I can only surmise that this is because futures are overbid by speculators while the underlying market is saturated with supply. Steel demand remains terrible. The China Steel PMI was

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Daily iron ore price update (fog)

The ferrous complex was soft on March 29, 2022: Chinese authorities have resumed their operations with Dalian hiking transaction fees again. However, for the time being, all that matters is the fog around Ukraine and OMICRON which may support prices until we get greater clarity. Against that, the Chinese PMIs will probably show more weakness.

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Daily iron ore price update (just awful)

The ferrous complex was strong on March 25, 2022: Chinese demand is just awful but production is only terrible: There is still nothing fundamental to rationalise such high prices but we’ve got so many disruptions to both supply and demand in raw materials and finished steel that fog has settled over the market and bidding

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Daily iron ore price update (CISA sound)

The ferrous complex was strong on March 23, 2022: CISA mid-March output was out and rebounded: One wonders if Chinese mills are starting to benefit from curtailed Ukrainian and Russian steel exports. Combined they were nearly 50mt. I’d expect China to pick up the lion’s share of whatever is knocked out. The export PMI will

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Daily iron ore price update (Simandon’t)

The ferrous complex was down on Friday February 11, 2022: Mysteel indexes are still weak: The big news is this: Guinea’s ruling junta has ordered the cessation of all activities at the massive Simandou iron ore deposit owned by Rio Tinto and a Chinese-backed consortium, saying it was seeking clarification of how Guinea’s interests will

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Daily iron ore price update (to the moon, sort of)

The ferrous complex followed all dirt higher on March 3, 2022: The proximate cause: China’s top government officials have issued orders to prioritize energy and commodities supply security, sparked by concerns over disruptions stemming from the Ukraine-Russia war. Government agencies, including the country’s top economic planning body — the National Development & Reform Commission —

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Australia’s terms-of-trade dives on lower iron ore prices

Within today’s dump of balance of payments data that feeds into tomorrow’s December quarter national accounts release was the important news that Australia’s terms-of-trade fell by 5.1% in seasonally adjusted terms: Other things equal, this fall in the terms-of-trade will subtract from national disposable income: The full national accounts for Q4 will be released tomorrow

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Chinese construction sinks from sight

The media and research reports are full of bull about a Chinese construction recovery that is just not happening. Finally, yesterday, Bloomie broke the spell: A widely-anticipated push by China’s government to boost construction in order to stabilize growth in the world’s second-largest economy has yet to materialize, a blow to hopes that Chinese stimulus

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Daily iron ore price update (Russian yawn)

The ferrous complex firmed on February 28, 2022: Heres’ the narrative: On the Singapore Exchange, iron ore’s most-active April contract SZZFJ2 rose as much as 3.2% to $141.05 a tonne. “Any prolonged military campaign will severely impact annual iron ore exports totaling almost 70 million tonnes from Russia and Ukraine, eventually tightening the global balance,”