Via Westpac: The deep global recession and similar contraction in industrial production represents a significant destruction in demand, while to date supply disruptions have been mixed. The most significant revision has been for crude oil while base metals have weakened further. Iron ore prices remain well supported, for now, but the lift in supply has
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 prices for April 14, 2020: Steel exports jumped in March but it looks very much like an anomaly after two very week months and lagged orders. Expect a crash ahead: Iron ore imports are falling away as steel mills curtail output to destock the steel inventory Everest: There no demand pressure here. Rolling
Iron ore prices for April 7, 2020: Spot up following Dalian. Steel is trending lower. It should be crashed but that will have to do, at Reuters: Nippon Steel Corp, Japan’s biggest steelmaker, will temporarily shut two blast furnaces in Japan later this month to cope with declining demand due to the coronavirus pandemic, it
Iron ore price for April 7, 2020: Not much news to report. I still see prices falling away from here as the global recession deepens. The only real risk to that is if the virus forces some further large scale shutdowns for Vale or elsewhere. Via Platts: Steel demand is falling outside China, with Japan’s
Iron ore prices for April 3, 2020: Spot is at the lows of its recent trading range. Paper too. I’m not sure what’s happened to coking coal futures and whether this is reflected in the physical market. I will report back on that. Brazil released March export figures of 21.71mt which is terrible thanks to
Iron ore prices for April 1, 2020: Spot soft. Paper too. And steel. We appear to finally readying to shunt lower here. And why not? Chinese steel ouput has been cut: But inventories remain unbelievable: And the world is shutting down, via FT: The world’s biggest iron ore producer said prices for the steel ingredient
Iron ore prices for March 31, 2020: Spot is still holding. Paper too. Steel prices are only eroding slowly. Port stocks of iron ore fell to 121.7mt. I have explined before why it is not that unreasonable that iron ore prices have held up given various supply restrictions. The real miracle is Chinese steel prices.
Iron ore prices for March 25, 2020: News is Wood Mac has turnied bearish following resilient prices “This is largely due to the resilience of Chinese hot metal production, coinciding with supply-side constraints in Brazil and Australia. …iron ore’s sell-off over the past few days is the start of a trend, not a blip,” adding
Iron ore price charts for March 23, 2020: Spot smashed. Paper too. Steel fell. Port sotcks fell away to 123.7mt. I was all ready to declare the crash at hand. No cigar. Via Bloomie: South Africa will close its mines for an unprecedented 21 days as part of a nationwide lockdown announced by President Cyril
Iron ore prices for March 18, 2020: Dalian was boosted yesterday by this: Brazilian iron ore producer Vale has shut its Teluk Rubiah iron ore blending terminal in Malaysia until 31 March to comply with a lockdown aimed at slowing the coronavirus outbreak. The Malaysian government has asked Vale to halt operations at the terminal
This from Vale: Vale informs on developments related to the outbreak of the coronavirus Rio de Janeiro, March 12th, 2020 – Vale S.A. (“Vale”) would like to take this opportunity to formally update the market on the steps and policies that it is taking to safeguard its employees and its business operations from the threats
Iron ore prices for March 13, 2020: Spot up. Paper to the moon. Steel strong. This is a nonsnese market now. Check this out: China’s latest steel inventories are now 25mt above last year. That’s 40mt of iron ore right there which more than accounts for mill and port lowish inventories of dirt. The outlook
Iron ore prices for March 9, 2020: Spot down. Paper too. But it’s the calm that impresses. Port stocks eased agin last week to 126.25mt. China is relatively short of iron inventory after last year’s Vale-inspired draw down. That said, I still don’t get why steel prices aren’t crashing amid the glut. Still lot’s of
Iron ore price update for March 6, 2020: Spot was down. Paper too. Chinese imports of iron ore for January/February were 177mt, up marginally on last year. The rolling annunal measure is stalling just above zero. The oil price crash should drag iron ore lower. It is the major imput cost for mining and logistics.
Iron ore prices for March 5, 2020: We’re still flopping around between restocking on stimulus hopes and titanic steel inventories that are still rising: Longer term, the future just got a little darker, at Bloomie: China is close to giving the go-ahead for some of its biggest state-owned companies to develop the giant Simandou iron
Iron ore price charts for March 3, 2020: Spot down. Paper down. Steel up. Strong iron ore prices can to some extent be explained by shockingly weak Brazilian exports. The last three months have seen some 120mt of annualised supply offline: If it were not for COVID-19, I reckon iron ore would back above $120
Iron ore prices for March 2, 2020: Spot soared. Paper soared. Steel soared. The steel PMI cratered. Everything is too disrupted to make much sense. Argus sums up the hope: Demand for steel collapsed following the impact of the coronavirus outbreak amid delays in resuming work at downstream companies. Demand for steel from overseas markets
Iron ore prices for February 29, 2020: We are surely going to break down here across the board. China does not have great iron ore inventories but its steel pile keeps hitting new Hiamlyan heights. Now approaching 50mt with several weeks of seasonal accumulation ahead even without terrible demand: And local mines should reopen. Aside
Iron ore prices for February 27, 2020: Breaking down but no panic yet. A few days ago I printed a chart showing huge rebar inventories. Alas the data was lifted from a mis-reporting article in The Australian. Here is the real chart: The pile is still huge when we add mills and traders, assuming Goldman
Iron ore prices for February 25, 2020: Prices are treading water now rather than rising. I still say big falls are ahead as seasonal weakness in supply fades and steel inventories push mills to cut production owing to weak end-useer demand. Via Argus: Mills are meeting domestic orders for February that were received before the