Iron ore price charts for November 4, 2017: Tianjin benchmark didn’t budge from $69.30 which means paper is done or it did not update. I’d guess the latter. Paper flamed out but so long steel keeps running so will it regardless of the sense in it. CISA weekly output for mid-November showed the first clear
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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Iron ore price charts for December 1, 2017: Tianjin benchmark up $1.50 t0 $69.30. Paper to the moon. Steel stalled. Anyone for some Bitiron? Once iron ore and coking coal were very solid supply and demand markets. With the advent of short term pricing and Chinese futures they have become as volatile as Bitcoin and virtually unreadable
Interesting from the AFR: Former Helloworld chief executive Elizabeth Gaines will replace Nev Power at the helm of Fortescue Metals Group, and looks set to preside over a period of strategic change at the iron ore miner. Upon announcing Ms Gaines elevation to the position of chief executive, Fortescue chairman and major shareholder Andrew Forrest
Iron ore price charts for November 29, 2017: Tianjin benchmark rose 20 cents to $67.20. Banana Man is loose. Stand back. Texture from Reuters: Steel mills across northern China were ordered to curb sintering output by up to half from this month through March. Sintering, where iron ore is processed ahead of steelmaking, causes heavy
Via UBS’s Wang Tao: Notable progress achieved in excess capacity reduction China officially cut 65 million and 290 million tons of steel and coal capacities in 2016, and will likely exceed its official targets again this year, of 50 million and 150 million tons respectively. Aside from capacity reductions, coal production restrictions, illegal steel capacity
Via Bloomie comes Goldman: The raw material may fall to $60 a ton in three months, $55 in six and $50 in 12, according to the New York-based bank’s projections… The forecast for lower prices “is mainly because we see steel production in China peaking and should fall going forward and iron ore supply is
Iron ore price charts for November 28, 2017: Tianjin benchmark fell 90 cents to $67. Paper stalled. Steel too. Prices will probably move with the looming PMIs next. A couple of interesting stories today, via the FT: China’s president Xi Jinping said at the Communist party congress last month that “houses are for living, not
Iron ore price charts for November 27, 2017: Tianjin benchmark rose 10 cents to $67.80. Paper flamed out. Steel is strong. Until it goes, inputs stay strong. Via Platts: Australian miner Fortescue Metals Group has increased the contract discount for 58.3%-Fe Fortescue Blend iron ore fines for cargoes loading in December at 29% discount against
Tianjin benchmark rose $1.30 to $67.80. Paper kept marching higher Friday night. Coking coal is mad. Steel is giving off a few little warnings, stalled. CISA output in early November was up a little to 1.8mt per day and does not appear overly impacted by shutdowns. Most of the global iron ore cost curve is
Iron ore price charts for November 23, 2017: Tianjin benchmark rose 90 cents to $66.50. Paper stalled overnight. Steel is range trading. Texture from the AFR: “Chinese steel inventory is very low heading into winter cuts … with current inventories only 14 per cent higher than the all-time low in December last year,” according to
Iron ore price charts for November 22, 2017: Tianjin benchmark launched $1.60 to $65.60. Paper went nuts overnight. Coking coal tore the roof off and is now as speculative as iron ore. Steel is firm. Banana Man is in control now. Using the cover of the Winter shutdowns as an excuse for fading macro data,
Iron ore price charts for November 21, 2017: Tianjin benchmark broke out, up $1.70 to $64. Steel took off. Coking coal is off and running. Texture from Reuters: Investors continue to look towards the pent up demand in early 2018 when the winter production constraints are removed,” ANZ analysts said in a note. Inventory
Tianjin benchmark rose 80 cents to $62.30. Paper was strong overnight. Port stocks hit new highs last week at 138.48mt. Texture from Reuters: But China’s own iron ore output last month rose 3.9 percent from a year ago. Against weakening demand from steel mills, the increase in China’s iron ore production “will only lead to
Iron ore price charts for November 16, 2017: Tianjin benchmark lifted 6o cents to $61.80. The rest is range trading. In news, India is considering breaking a dam, via Reuters: India is considering scrapping or reducing a 30 percent export tax on medium-grade iron ore after building up a stubbornly high surplus of the commodity,
Iron ore price charts for November 15, 2017: Tianjin spot fell $1.60 to $61.20. Paper was stable overnight. Steel got whacked yesterday. CISA late October output fell 1.6% to 1.79mt per day. The decline is now showing evidence of either shutdowns or easing demand. Nothing is discounted here yet. If the market is going to
Iron ore charts for November 14, 2017: Tianjin benchmark rose 90 cents to $62.80. Paper was burned overnight. Steel is range trading. Yesterday’s China data clearly telegraphed the future of weakening demand. Real estate sales growth continues to fall at a good clip year to date: They are now falling year on year at -6.4%.
Iron ore price charts for November 13, 2018: Tianjin benchmark fell 10 cents to $61.90. Steel was firm. Paper too. Port stocks hovered at the highs last week of 137.87mt. The entire complex is trading as one at the moment. Bulks should be felling even as steel remains strong but ever time they try, speculators
Iron ore price charts for November 10, 2017: Tianjin benchmark was up 10 cents to $62. The debate is raging around the impact of shutdowns, Via Domainfax: “I think the next three to six months is going to be fascinating because never in anyone’s lifetime have we seen mandated shuts on a scale we are
Iron ore prices for November 9, 2017: Tianjin benchmark fell 60 cents to $61.90. Paper fell more overnight. Coking coal too. Steel is stuck. Port Hedland shipments in October were soft at 41mt. We appear to be range trading around Banana Man. We should already be at $50 on fundamentals so who knows where we
Iron ore price charts for November 8, 2017: Tianjin benchmark rose 20 cents to $62.50. Paper took off last night. Steel is flat. Reuters has texture: China’s iron ore imports fell nearly 23 percent in October from record levels the previous month, customs data showed on Wednesday, with steel mills in the world’s top producer
Iron ore price charts for November 7, 2017: Tianjin benchmark fell 40 cents to $62.30. Paper fell overnight. Coking coal too. Steel is stable. 42 port inventories rose 2% last week to 138.6mt. Texture from Reuters: Chinese cities have ordered their steel mills to cut output from this month through March as part of Beijing’s
Iron ore price charts for November 6, 2017: Tianjin benchmark surged 5.6% to $62.30. Paper came off overnight. Coking coal is less excited. Steel too. Me as well. This is Banana Man (Chinese retail speculators) at work. I’d fade the rally. Reuters has texture: The war on pollution was partly to blame for third quarter
Iron ore price charts for November 3, 2017: Tianjin spit listed 10 cents to $58.40. Paper rallied overnight but is stretching away from physical. Coking coal futures were firm. Steel too. Reuters has texture: Steel mills across China, particularly in the country’s biggest steel producing city of Tangshan, were expected to begin cutting production to
Via Domainfax: Evans & Partners analyst Andrew Hines said life would get progressively tougher for Fortescue in coming years, as rising energy and currency costs combined with mine depletion and persistent pricing discounts. “Over the past four years Fortescue has deliberately lowered the average grade of its product by lowering the cut-off grade at its Cloudbreak operation
Iron ore price charts for November 2, 2017: Tianjin benchmark rose 80 cents to $59.30. Paper was flat overnight. Steel flat yesterday. CISA released mid-October output number for major mills down -1% to 1.82mt per day. Nothing out of the ordinary for this time of year. We’re just range trading here. Nothing changed for me.
Via Credit Suisse: Fortescue’s net present value would fall to just $1.40 a share if the current discounts are sustained. The lower-grade iron ore predominantly produced by Fortescue has historically sold at a 10 per cent discount to the spot price of higher grade material, but the gap has blown out to around 30 per
Iron ore price charts for November 1, 2017: Tianjin benchmark rose 10 cents to $58.50. Paper dead cat bounced overnight, especially coking coal. Steel futures firmed. I do yet think we’re at the bottom. Some comments from The Australian: Chinese delegates at the International Mining and Resources Conference in Melbourne reiterated medium-term forecasts of about
Iron ore price charts for October 31, 2017: Tianjin benchmark lifted 40 cents to $58.40. Paper was up a little overnight. Coking coal was hammered. Steel is fading. Last week’s port stocks rose a demoralising 3.6mt to 135.5mt. Yesterday’s steel PMI fell to 52.7 and 55.9 for new orders. Markets took the data as glass