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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How big is the iron ore supply hole?

Some nice data from Clyde Russell: Australia’s iron ore exports rebounded in April after being hit by a cyclone the prior month, but the surge in shipments wasn’t enough to offset declining volumes from Brazil in the wake of January’s tailings dam disaster. Australian exports were about 69.1 million tonnes in April, according to preliminary


Daily iron ore price update (peak is in)

Iron ore price for April 25, 2019: Spot down. Paper down. Steel down. I believe the peak is in here as China’s southern rainy season builds and delivers the May/June bulks correction. Beyond that, there is reason to believe we’ll see further steady declines in average prices. Chinese demand is waning, via Bloomie: The top


Daily iron ore price update (future pain)

Iron ore prices for April 22, 2019: Spot firm. 12 month futures sagged as supply is responding. Steel OK. Here’s the problem a year and more out, via Bloomie: Mining dealmaker Mick Davis has won permission to export iron-ore from a planned mine in West Africa, adding momentum to the industry veteran’s comeback. Davis, through


RIO iron ore damage less than expected

Via RIO this morning: Rio Tinto chief executive J-S Jacques said “Our iron ore business faced several challenges at the start of this year, particularly from tropical cyclones. As a result, and following the continuing assessment of damage at the port resulting from the cyclones and other minor disruptions, 2019 guidance for Pilbara shipments is


China’s “targeted stimulus” no good for dirt

Via Bloomie: Since last year, the government has doubled down on this kind of “targeted” stimulus, emphasizing the role of consumption and the promotion of a long-standing shift toward services and higher-value manufacturing — and away from expensive mega-projects. …Overall though, the relative restraint of the new stimulus strategy should help slow a build up


Daily iron ore price update (more Vale)

Iron ore prices for April 10, 2019: Dancing on a pinhead now. New has Vale in more trouble, via Reuters: Prosecutors are planning to file criminal charges against Brazil’s miner Vale SA and its employees over the collapse of a mine-waste dam in January that killed hundreds of people, the Wall Street Journal reported, citing the


Daily iron ore price update (time to sell?)

Iron ore prices for April 4, 2019: Spot cooled. Paper is still warm. Steel is stuck. Some are bailing on the rally, via Seeking Alpha: The prospect of reduced global supply and improved demand for iron ore in China is being misread by investors, according to Liberum Capital, which reiterates Sell ratings on BHP, Rio Tinto (NYSE:RIO) and


China steel PMI remains weak

Here are the latest China steel PMI numbers: March Feb. Jan. Dec. Nov. Oct. Sept. 2019 2019 2019 2018 2018 2018 2018 Index Steel Industry PMI 46.8 50.6 51.5 45.6 45.2 52.1 52.0  Output 44.7 52.2 46.8 44.6 47.6 55.7 53.6  New Orders 46.3 47.8 53.4 39.5 35.4 52.3 48.9  New Export Orders 46.2 48.7