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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So far I will score my battle with Goldman over the nature and form of today’s commodity bull market at a draw. They have been right so far on metals and oil. I have been right on iron ore and other materials. The most pressing disagreement between us is whether or not strong price action
The ferrous complex was weak on October 15, 2021 as spot eased and paper tanked overnight: The market is in a state of enormous and growing oversupply. It has to rationalise big quantities. That will take $60 just to get it underway. Unless something else changes. I do not think that it will and expect
The ferrous complex was mixed on October 14, 2021 as spot rose and paper eased: The latest CISA numbers are out and show some bounce back from the late-September catastrophe with production back to 2017 levels: But inventory levels also bounced strongly so output is probably now too high. The latest inventory numbers are still
Some sanity, anyway. The ferrous complex continued deflating on October 13, 2021 as spot fell and paper fell more overnight: Chinese trade data was pretty ordinary for ferrous. Iron ore imports were 97.49mt. Decent but no cigar: Steel exports are falling away as expected at 4.9mt: Westpac’s new outlook looks about right to me: Iron
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)
The ferrous complex was nuts on October 11, 2021 as spot launched, paper faded overnight and steel was pretty soft: I could observe briefly that roughly one-third of the demand for the global seaborne iron ore market is in complete meltdown but nobody is listening so I’ll just make a joke about it and move
The ferrous complex returned from holiday with a bang on Friday October 8, 2021 as spot rallied, paper jumped and steel climbed: Do not be fooled. This is a measure only of how crazy markets are right now. Some folks are arguing that the rally is justified by the notion that Chinese power outages will
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
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
Fortescue cracks a new correction low below $14 as UBS declares “don’t buy miners now!” UBS View: Start of the commodity down cycle – too early to Buy the miners In June (Topping out) we highlighted that we did not believe we were at the start of a commodity ‘super-cycle’ and, even though the demand
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
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
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
The ferrous complex was mixed on September 28, 2021 as spot iron ore plunged, paper did a bit better overnight and steel rallied: The Baltic Dry is going crazy: It really is back to the pre-GFC good old days with inflation mania, energy bubbles and panic buying: * The capesize index advanced 722 points, or
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.
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
The ferrous complex was still enjoying its bear market rally on September 26, 2021 as spot firmed, paper went silly overnight but steel fell on the week: There is no change in the outlook. I still expect iron to keep falling to $60 soon. Indeed, the risk grow to the downside of that price the
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
The ferrous complex flamed out on September 23, 2021 as spot iron ore firmed but paper markets fell overnight amid rises in just about everything else: In news, global steel output is now falling at a good clip: World crude steel production for the 64 countries reporting to the World Steel Association (worldsteel) was 156.8 million
The ferrous complex dead cat bounced yesterday which is entirely normal for a grand bear market. Spot launched higher and paper kept running overnight: Funny stuff typical of a bear market. Not much to report in wider news. Evergrande will be restructured. It is not the problem. This is NOT over: Chinese property demand will
China Evergrande’s main unit Hengda Real Estate has clarified that it will make coupon payments for onshore bonds due tomorrow. It looks like it’s probably a default: In a vaguely worded exchange filing on Wednesday, the unit said that the issue for its 5.8% 2025 bond “has been resolved via negotiations off the clearing house,”
Iron ore was unchanged yesterday at $94. It just keeps getting worse for the ferrous complex. China now has a steel glut. Levels are higher than this time last year which is very high: But steel output is well below 2020: So the inventory to sales ratio is climbing fast despite all of the output
The ferrous complex is fucked. No other word for it. Despite Dalian being closed, the spot ore price was smashed again with Singapore futures: We appear to be on a one-way ticket to $60 and an overshoot has to become a serious possibility as well. I also think that ludicrous coking coal prices are next.
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
The ferrous complex remained under intense pressure on September 17, 2021 with both spot and paper getting flogged again: There was no movement in Dalain overnight because it is closed for holidays until Wednesday. A circuit breaker if ever there was one needed. My $100 target reached! Where to next? UBS has more: Iron ore
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
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
The ferrous complex was in free fall on September 16, 2021 as spot and paper collapsed. Steel has not updated: Yes, we will likely be at $100 tomorrow. I was not bearish enough. There is no end is sight. CISA early September steel output data kept on falling: And the Chinese property developer shakeout is
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
The ferrous complex was very weak again yesterday as China’s construction hard landing became obvious. Spot tumbled and paper fell more overnight. Steel has not updated: Worse is still ahead. $100 this year and $60 next with all the risk being to downside for earlier. Some folks don’t get it. Jevons Global at Livewire: Trite
