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

0

Steel pulverised as China mulls flexible shutdowns

Via Reuters: Prices of steel and its raw materials fell sharply in China for a second session on Wednesday, hitting multi-week lows, as more investors liquidated positions with oversupply risks rising as Beijing mulls a flexible implementation of its output curbs. China is considering allowing its northern provinces to decide individual output cuts by heavy

2

Banana Man abandons iron ore

Via Platts: Open interest in iron ore futures traded on China’s Dalian Commodity Exchange has fallen below 1 million lots in August, after peaking in April above 2.6 million lots. Iron ore open interest stood at 975,722 lots last Thursday, a year-to-date low, and at 981,858 lots on Monday. One lot is 100 mt. The

2

Fortescue sinks again

Interesting to note that the Fortescue share price is again in free fall: It’s not a very pretty chart with support around $3 and that’s about it. The culprit is discounts that just won’t narrow, via Platts: Australian miner Fortescue Metals Group has maintained the discount for term contracts for 58.3%-Fe Fortescue Blend fines and

5

Daily iron ore price update (down)

Iron ore prices for August 27, 2018: Spot down. Paper down. Steel down. I think the top is in here. The price signal from steel does not need to be this high and we’re entering the seasonally weak period plus Chinese Winter shutdowns. World Steel is still booming though: World crude steel production for the

2

The future of iron ore

Terrific stuff here from Westpac’s Justin Smirk: •Demand for iron ore has been very robust this year but more importantly there has been the collapse in Chinese ore production in response to industry reforms as well as a soft patch in imports. The more rigorous implementation of environmental policies has hit iron ore miners hard.

1

Daily iron ore price update (peak)

Iron ore prices for August 24, 2018: Spot firmed. Paper was flat. Steel fell. Rebar inventories are still one million tonnes higher than last year yet steel prices are 30% higher. Doesn’t make sense to me given even if Winter shutdowns are a little longer they we already know that idle capacity can cope. I

4

Daily iron ore price update (orgy)

Iron ore prices for August 13, 2018: The stimulus party rolls on, largely confined to futures markets. This is still not inconsistent with seasonal patterns, especially so since the Winter shutdowns bring forward demand. Rebar inventories are still falling at a decent clip even if well above last year. My outlook remains unchanged. Overnight Chinese

7

China is fantastically reliant upon Australia

We all know how it ends. Eventually China is overwhelmed by its own bad debt. The dreams of empire crumble to empty vestiges, wealth greys with demographics, dynamism sinks into the rentier bog and endless growth into secular stagnation. This is China’s destiny and Australia will suffer for it. But in the meantime we are

0

Daily iron ore price update (much ado)

Tianjin benchmark lifted 65 cents to $68.75. Paper fell overnight. Rebar inventories fell again last week but remains well above the lows of last year. CISA daily steel output is trending down solidly. Steel prices have clearly responded to easing Chinese monetary policy. But there is nothing here out of the ordinary yet in terms