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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The baffling strength of iron ore revenues

I was going to write this post yesterday but Damien Boey has beaten me to it: The trade balance has come in surprisingly strong, delivering “nominal easing” to offshore-exposed companies and their relatives. The September trade balance surprised well and truly to the upside, rising to $7.2 billion from an upwardly-revised $6.6 billion. We were

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Daily iron ore price update (reluctant)

Texture from Reuters: Notwithstanding the pressure from stabilising supply from top exporters Brazil and Australia, iron ore prices should find support as steel margins have improved, analysts at ANZ Research said in a note. “Steel mills have been reluctant to restock raw materials as margins fell amid a gloomy outlook for steel demand,” they said.

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Daily iron ore price update (stuck)

Texture from MySteel: Many Chinese steelmakers, together with some iron ore traders, are actively drawing down their iron ore stocks at hand when mills in many areas are facing frequent curbs on their steelmaking operations, affecting iron ore consumption, Mysteel Global learned Tuesday. “We are cutting our procurement of seaborne iron ore cargoes from the

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A new iron ore deluge builds

Via RIO at Bloomie: Iron ore shipments from Rio Tinto Group could rise as much as 5% in 2020 as the producer recovers from operational issues in Australia this year, the exporter says Thursday. The No. 2 miner will also have consistent capacity for volumes of about 360m tons a year once a first phase of the

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Daily iron ore price update (ports)

Texture from Reuters: “Investors remained cautious amid subdued Chinese steel margins and construction demand,” ANZ Research analysts said in a note. “An undersupplied (global) market remains the reality and this has seen prices holding up near $90 a tonne,” ANZ analysts said. Rubbish. The market is oversupplied and will get more so when Vale returns

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Daily iron ore price update (February)

Texture from Reuters: But Darren Toh, data scientist at Singapore-based steel and iron data analytics company Tivlon Technologies, said he remained bullish on iron ore. Steel inventory is easing and the pace of infrastructure projects is accelerating, said Toh, adding that increasing property investment was also being seen. Meh. It’s seasonal. To the charts: Spot

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Daily iron ore update (restock time?)

Texture from Reuters: “While Tangshan cities are facing production curbs to reduce pollution, other steel plants are reported to increase their production because of attractive profitability,” Argonaut Securities said in a note. China’s top steelmaking province of Hebei had implemented overnight inspections on illegal industrial works and emissions as an effort to crack down pollution,

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Daily iron ore price update (conniption)

Texture from Reuters: China’s central province of Henan has issued an orange smog alert, the second highest in the nation’s three-tier pollution alarm system, which will be applied to 12 cities. The alert means pollution controls in heavy industries, including steel and coke, will be strengthened from Oct. 18 to Oct. 23. In China’s top

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Why iron ore is going back to $20

Via Argus: Higher pollutant emission standards for China’s steel industry continued to drive the country’s steel scrap usage for steel production higher in the first six months of this year. Chinese steel scrap consumption rose significantly, by 20.7pc on the year to 103.28mn t in January-June from 85.57mn t in the same period in 2018,

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Daily iron ore price update (all over the place)

Texture from Reuters: Trade tensions between the United States and China, the world’s two largest economies, are a significant source of risk for the global economy, with “real spillover effects” for emerging markets, top IMF officials said on Wednesday. demand in top consumer and producer China is forecast to grow just 1% next year, compared

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What killed coking coal?

Via Wood Mackenzie: There has been an uneasy tension around hard coking coal (HCC) prices for some time. Few would argue that US$200/t prices for seaborne HCCs were sustainable. But at the same time, the market had become accustomed to sky-high prices, kept artificially strong while China focused on restructuring its steel and coal sectors.

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Daily iron ore price update (the thumpening)

Texture from Reuters: Benchmark Dalian iron ore futures slumped in morning trade on Wednesday, extending losses into a third session, after China’s top steelmaking city of Tangshan issued a second-level smog alert that requires mills to further limit operations. …The losses widened further after China outlined its annual anti-pollution plan for winter in a document

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CBA: Iron ore to hammer nominal GDP, Budget

Via CBA today: Australia’s key commodity prices to ease from here ■ We see Australia’s key commodity prices moving lower from here. ■ But despite lower commodity prices, Australia’s external sector should have another good year as export volumes continue to lift and the lower Australian dollar boosts our competitiveness. ■ An expected decline in