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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4

Daily iron ore price update (catastrophic)

The ferrous complex was catastrophic on October 12, 2021 as spot was smashed, paper eased and steel was thumped: Oddly, spot traded off crashing Singapore futures rather than a calmer Dalian. Anything seems possible these days. The underlying conditions are extraordinary. CISA’s late September output cratered 11% to lower output than 2013: Some (a lot)

4

Iron ore markets return

Some data to catch up on. The Baltic Dry is going bananas on the energy panic in coal: With iron ore falling, this is not helping mining margins as shipping and deisel go through the roof. Brazilian iron ore supply had a softer month in September at 33.7mt though that was down to fewer days

14

China blinks, unloads Aussie coal

Things are bad. FT: China has started unloading a small number of Australian coal shipments despite an unofficial import ban, analysts said, in a move underscoring the intensity of the power crunch facing the world’s second-largest economy. Nick Ristic, lead dry cargo analyst at Braemar ACM Shipbroking, said a handful of Australian cargoes waiting outside

5

Chinese recession intensifies

Evergrande news is thick and fast. Some kind of selective bail-out and bail-in is underway depending upon whether you’re Chinese or not. Sincocism: Evergrande appeases high-yield onshore investors with partial cash repayment as some local governments bar property-for-debt swap | South China Morning Post In a notice seen by the Post, the Housing and Urban-Rural

3

So that’s why iron ore went nuts

This morning I noted the crazed bid in Dalian iron ore futures overnight which have boomed and busted so far today: What triggered such manic action? This: At a meeting chaired by central bank Governor Yi Gang, authorities told financial institutions to cooperate with governments “to jointly maintain the steady and healthy development of the

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Daily iron ore price update (limit up!)

Amusing stuff for the ferrous complex on September 29, 2021 as spot firmed and paper went limit up overnight: Did China stimulate? No. Did another Vale dam break? No. The only story to trigger this mad bid was this: The department predicted benchmark iron ore prices – excluding the cost of freight –would average $US115

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Evergrande begins “terminal decline” of Australia’s iron ore era

The Evergrande creditors are piling up and there is no relief in spreads: The world’s most indebted developer needs to pay a $45.2 million coupon on Wednesday for a dollar bond that matures 2024, Bloomberg-compiled data show. The payment has a 30-day grace period before default could be declared, according to the note’s offering memorandum.

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Daily iron ore price update (to Mars!)

The ferrous complex was off the hook bullish on September 27, 2021 as spot went to Mars, paper fell overnight and steel remains strong: This looks like a classic bear market rally to me. Does anyone even remember what they look like? Or is everyone an online influencer buying “stonks” these days? The underlying situation

7

China’s $60tr property monster “frozen”

Wall Street spruikers are steadily narrowing their bullish bets on the new “commodities supercycle”. Although headline indexes for commodities are still very high, they are increasingly reliant upon energy for any bull case. As we saw last week, the numero uno copper and metals bull, Goldman Sachs, is hedging its bets big time: We divide

5

China IS commodities and it’s going to break ’em ALL

When will China relent on its economic reform program around property developers? When will it stimulate? My answers are not yet and don’t hold your breath. Why? Let me show you two charts. The first nicely captures the extreme bullshit being peddled by Wall Street about a new commodities supercycle. Note that the trigger is

29

Evergrande losers take company executives hostage

Via Straits Times: Footage of Evergrande’s management being held hostage in company offices by anxious retail investors made the rounds on China’s social media earlier this week. “I have with me Nanchang’s top Evergrande representative surnamed Chen,” said WeChat user Yang Qiwen, referring to the city in Jiangxi province in south-eastern China. The posting included

3

UBS: Sell Fortescue, RIO

And here they come. UBS on FMG: Downgrade to Sell: iron ore fundamentals deteriorating faster than expected We downgrade FMG to Sell (from Neutral), cutting our target to A$15/sh (from A$18/sh). Since peaking in July, the stock is down 34% while the iron ore price has more than halved. At spot (~$113/t) FMG still generates

11

The disastrous Fortescue chart

A quick note on a few FMG points as iron ore continues to fall. Dalian today: First, what a horrible chart FMG has with an immense double top: How far FMG corrects obviously depends upon the iron ore price. My best guess is we’re going back to $60 over the next six months, with a