Iron ore prices for May 7, 2019: Spot soared. Paper flamed out overnight on trade war worries. All else is stable. Port stocks fell another 2.4mt last week and are free falling. CISA steel output is at its highest ever in mid-April, above 2mt per day. Via Reuters: The Brazilian miner on Monday said that
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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Via Reuters: Brazilian miner Vale SA said on Monday that a court had ordered it to halt operations at its Brucutu iron ore mining complex, reversing a lower court decision that had allowed the mines activities to resume. The company also said it expects its 2019 sales of iron ore and pellets to be at
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
Iron ore prices for April 26, 2019: Everything is petty stable for now. CISA steel output numbers for early April ripped higher. It will be interesting to see if they converge with last year headed into mid-year. Rebar inventories peaked higher this year in Q1 but are drawing down faster so there’s obviously still life
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
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
Iron ore prices for April 17, 2019: Spot spanked on Brucutu. Paper more. Steel solid. Port stocks are climbing, 149mt last week, suggesting no shortage or ore. We might see some price strength as mills restock a little longer but the clear risk now is more price falls moving into May/June which is a
Iron ore prices for April 16, 2019: Spot down. Paper easing. Steel too. The news is Brucutu, via Reuters: A Brazilian state court has authorized iron ore miner Vale SA to resume operations at the Brucutu mine, its largest in Minas Gerais state, according to a court document. Brucutu was shuttered in early February by
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
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
Iron ore prices for April 11, 2019: Spot up. Paper calm. Steel up. CISA late March steel output fell sharply and is only up a little year on year. I’ve added a second line (in black) to show what underlying demand is like ex-reforms that shifted illegal scrap production into blast furnaces over the past
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
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
Iron ore prices for April 3, 2019: Spot wild. Paper flamed out as the contract rolled forward. Steel was up but also rolled. Via Platts: Iron ore prices may see short-term strength as a result of disruption from Tropical Cyclone Veronica in Western Australia and Vale’s expectation of reduced sales volumes this year, Barclays said
Via the AFR comes FMG’s new magnetite mine: Iron Bridge would deliver a premium product with iron content of 67 per cent. About 3000 workers will be required for the construction and there will be about 900 permanent jobs once the mine is in production. The mine is expected to produce 22 million tonnes a year
Iron ore prices for March 29, 2019: Spot roared. Paper less so. Steel jumped. The cause was RIO: Rio Tinto said on Friday it issued force majeure notices to some iron ore customers due to damage from tropical cyclone Veronica, which hit Western Australia earlier this week. A force majeure is invoked when a company
Iron ore prices for March 28, 2019: Spot down. All else stable. Vale has offered more details, via Platts: Brazilian miner Vale’s iron ore shipments in 2019 are set to total between 50 million mt to 75 million mt below its prior forecasts due to its recent troubles, Chief Financial Officer Luciano Siani Pires said
There are reasons to be optimistic. More infrastructure is coming. But there are other, more powerful forces, that make it a worry. We know steel demand is being dented by the manufacturing recession and weak car demand. But the big one is realty. It always is, constituting 30-40% of steel consumption. This is a problem
Iron ore prices for March 26, 2019: Spot eased. Paper stable. Steel too. Port stocks rose to 148.6mt. Vale is out with its latest damage estimate, via Reuters: On Tuesday, Vale reported an 8.2 percent rise in quarterly iron ore production, bringing full-year 2018 output to 384.64 million tonnes, slightly below its annual target. In