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.

Also Check – Australian Dollar

Find below our daily feed of market analysis

1

Fortescue discounts rocket

Not news to MB readers but interesting texture via the AFR: But while Fortescue has historically received a discount of 10 to 15 per cent to the benchmark, in the 2017 financial year it achieved sales at a discount of 23 per cent. The gap widened to 27 per cent in the June quarter.According to pricing

2

Enthusiasm for miners slides

Credit Suisse is pulling back: Still long commodity producers, but less so ■ Everything is awesome: All of the three main macro drivers of the commodity producers have been supportive. Chinese fiscal policy has been in expansion mode, Chinese money supply has been growing and the US Dollar has been depreciating. Since the recent lows

3

Daily iron ore price update (splat)

Iron ore price charts for September 14, 2017: Tianjin benchmark fell 70 cents to $73.40. Paper was flogged into the close yesterday but recovered some ground overnight. Steel has not updated but futures fell. Yesterday’s China data showed clearly that demand is going to ease in the months ahead. But not crash. Floor area starts

2

Daily iron ore price update (the turn)

Iron ore price charts for September 13, 2017: Tianjin benchmark was unchanged at $74.20. Paper fell overnight. Coking coal is madly inflated. Steel price to come. Via Platts: High iron ore prices this year have been a function of strong steel prices and any weakening in the latter will likely dampen the benchmark raw material,

2

Daily iron ore price update (coking kiss)

Iron ore price charts for September 11, 2017: Tianjin benchmark ease 10 cents to $73.60. Paper took off overnight. Coking coal is wild. From Platts: China’s steel mills are opting to buy higher grade iron ore cargoes domestically and from the seaborne import market over readily-available mostly medium and lower grade port stocks as this

0

Big Sleazy catches a bid as Big Iron fails break out

Dalian is trying repair overnight damage today: Big Iron is down sharply. BHP and RIO failed at largish double tops, at least for now… Big Gas is soft but the pensioner abuse specialists continue their predictable but appalling re-rating: Big Gold is off sharply. I remain a seller short term: Big Sleazy has caught a

5

China installs coal protections

Via the AFR: China has moved to restrict coal imports in an effort to provide further support to its local industry, a move sure to hurt Australian miners which have benefitted from big supply cuts on the mainland over the last year. The first sign of what is being described as an “unofficial” government policy

2

Daily iron ore price update (toppy)

Iron ore price charts for September 8, 2017: Tianjin benchmark tumbled 3% to $73.70. Steel eased. Coking coal spot is still at an astonishing $209. Both paper and spot are starting to look a bit toppy here. Even the carnage in the USD failed to trigger any new bid. However, until steel weakens the jury

6

Big Sleazy breaks to new lows

Dalian is trying to rebound: BHP is still nudging breakout: Big Gas continues its re-rating with exporters down and the domestic gougers flying: All I can say to that is, what a pack of bloody idiots we are. Big Gold is powering, working beautifully as portfolio insurance. I’m still a seller here for the short

2

Daily iron ore price update (stall)

Iron ore price charts for September 5, 2017: Tianjin benchmark rose 30 cents to $77.50. Paper fell sharply overnight. Rebar is at new highs. Retuers has texture: China’s iron ore futures dropped on Tuesday for the first time in four sessions after a fire at a government-owned steel mill raised concerns that planned safety inspections may

5

Chinese steel mill reform drawing to a close

At last some clarity on the Chinese steel sector reform that has so disrupted the market his year. Via Macquarie: China commodities trip: Update on government policy and steel  At the start of this year, we highlighted that Chinese commodity demand would be intertwined with government policy in 2017. Government intervention has stepped up

1

Daily iron ore price update (congestion)

Iron ore price charts for September 4, 2017: Tianjin benchmark jumped $1.40 to $77.20 which was catch-up really. Paper fell overnight. Steel has not updated. We’re seeing a little price congestion now but I still can’t see falls for a couple of months yet. With reform keeping steel margins so high, it’ll take a clear

15

Where is all that Chinese steel going?

Some more today on the recent rocket ship of Chinese steel new orders, from Macquarie:  Data from the China Federation of Logistics & Purchasing (CFLP)1 show that activity in China’s steel sector expanded at its fastest pace in August since April 2016, with the steel PMI index rising to 57.2 from 54.9 in July.

3

Daily iron ore price update (full blown boom)

Iron ore price charts for September 1, 2017: Tianjin benchmark was unchanged at $75.80. Paper ripped overnight. Steel is hovering at the highs. Port stocks were basically stable. The thermal coal restock appears to be easing. CISA mid-August output at major steel mills was insane as induction mill closures swing some 40-50mt of production into

6

Daily iron ore price update (becalmed)

Iron ore price charts for August 31, 2017: Tianjin benchmark rose only 40 cents to $75.80 and is becalmed versus the hysterics at Dalian, which took off again yesterday. Steel fell. Coking coal is up again. Thermal appears likely to have topped. Yesterday’s steel PMI showed the boom runs unabated: New orders are bonkers. We’ve

0

China steel PMI melts up

The China steel PMI is notoriously volatile. It is perhaps therefore a better directional indicator than it is an absolute reading on conditions. Nonetheless, today’s version is off its face at 57.2 with new orders rocketing to 66.6: Stock inventories are still drawing as well though raw materials are rising. The non-manufacturing PMI suggested a

1

Macquarie upgrades iron ore, Straya

Via Macquarie:  Data released since the start of the year shows the outlook has improved markedly since the end of 2016. Rising business confidence is driving job creation and providing a key support to household income and consumer spending while wages growth remains weak. In 2017, we expect 1.8% GDP growth followed by 2.2%