Iron ore prices for March 6, 2018: Tianjin benchmark fell 65 cents to $75. Paper lifted overnight. Coking coal is solid. Steel too. CIAS output for mid-Feb hit 1.8mt which again shows Winter shutdowns have done nothing to dent output. The craziest data point was Chinese port stocks of iron ore which hit an astonishing
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 March 5, 2018: Tianjin benchmark fell $2 to $75.65. Paper down more overnight. Steel is easing. Muted stuff really. Just blowing the recent froth off. Macquarie has some bullish reasoning: Virtually all of the producers we covered are in the money as prices are well above the seaborne marginal cost (SMC),
Paul Kelly is horrified: The true heart of Donald Trump is exposed. His protectionism is a threat to American workers, industry and exports, a betrayal of US leadership and guaranteed to provoke retaliation leading to possibly more serious global damage. Malcolm Turnbull had no option but to attack protectionism and, by extension, repudiate Trump. This
Iron ore prices for March 2, 2018: Tianjin benchmark got whacked -2.4% to $77.65. Paper fell further overnight. Steel fell. Two more charts to complete the picture. CISA steel mill output for early February lifted 1.6% to 1.78mt and is running at levels solidly above last year. But the huge spreads we saw between mid-2017
Iron ore prices for February 2018: Tianjin benchmark fell 65 cents to $78.90. Paper and steel are still firm. The China steel PMI fell to 49.5. There’ll be more noise ahead for that as Winter shutdowns pass but the trend is unmistakable. Vale results have thrown up some points. Samarco is till in the offing:
Via Reuters: China’s top steelmaking city of Tangshan has proposed new restrictions on production once the current curbs expire in March in order to improve air quality, according to a draft document reviewed by Reuters. Under the proposal from the government dated February 12, the city’s mills will continue limiting production for 244 days between March 16
Iron ore price charts for February 26, 2018: Tianjin benchmark rose 75 cents to $79.75. Steel was strong. Paper less so. No surprises here. Q1 is usually strong. We’re setting up a great short pushing towards mid-year. World Steel released output numbers for January: World crude steel production for the 64 countries reporting to the World
Iron ore prices for February 23, 2018: Spot up. Paper up. Steel up. Those charts look like they want to go higher. Sure could in the near term. Q1 strong then Q2 weak. Meanwhile, the seasonal Chinese steel restock goes on with trader inventories hitting 5.4mt in early February: Given the rebuild usually runs
Via UBS: Results below expectations, dividend small consolation Today’s result did not quite meet market expectations, which was largely due to oneoffs such as smelter maintenance at OD, a fire at WAIO, and write-offs at Escondida. Underlying EBITDA was US$11,238m (+14% y/y) vs UBSe US$11,838m & cons of US$11,593m. FCF of US$4.9bn beat UBS expectations
Via UBS: February 2018 reporting season kicks off Reporting season kicked off with RIO on 07 Feb delivering a 69% growth in profit and returning 49% of cash generated to shareholders, setting the scene for what could be a cash bonanza for shareholders. Cash returns to be the focus of the major miners We expect
Iron ore price charts for February 13, 2018: Tianjin benchmark up $1.30 t0 $77.85. Paper too. Steel stuck. We’re range trading. CISA output fell 1.3% in late January. Not a great sign for demand. More on discounts today: Mt Gibson Iron has become the latest iron ore producer to describe the wide price gap between
Iron ore price update for February 6, 2018: Tianjin benchmark was up 5 cents to $76. Steel is stable. Coking coal running on weather. Chinese port stocks were down 1.02mt last week but that could also be weather impacted. Port Hedland shipments fell in January to 41.1mt from 46.6mt in December, also likely owing to
Iron ore prices for February 5, 2018: Tianjin benchmark jumped $2.15 to $75.95. Coking coal took off. Steel is stable. Reuters tells the tale: Icy weather and heavy snows in many regions have limited the transportation of raw materials like coking coal and coke, lifting prices even as appetite from steel mills remains subdued. “Transportation
Via Bloomie: Surging output, tight inventories and supply constraints will help push copper to $8,000 a ton over the next 12 months — a level not seen since 2013 — while iron ore will rally by nearly a fifth by the beginning of May, analysts including Jeffrey Currie and Michael Hinds said in a report.
Iron ore prices for February 1, 2018: Tianjin benchmark fell 40 cents to $72.70. Paper firmed overnight. Steel is range trading. The news is shutdown extension, or is it? China’s Hebei province denied news reports on Thursday that it will extend steel production curbs imposed for the winter season, as sources told Reuters that authorities
Blow me down with a feather, from MinRes: For future reference, when assessing the economic impact, by my calculations 58% discounts at this level reduce Australia’s net iron ore export price by $4 per tonne. Given the rebound in shipping rates to $7-8 that means you need to reduce the CFR spot price by $11-12
Iron ore price charts January 31, 2018: Tianjin benchmark fell 40 cent to $73.10. Paper held on overnight. Steel softened but has not broken either way yet. CISA mid-January output eased but is still at reasonable levels. The steel PMI lifted a little to 50.9. Steady as she goes. No fireworks until Q2. Platts
Tianjin benchmark fell 25 cents to $73.50. Paper was soft overnight. Steel is range trading. Rebar inventories in China climbed to nearly 4mt last week, a little down year on year. We’ll next see the big restock of steel inventories. It appears on track so far, relatively unaffected by Winter shutdowns. If so then I
Fortescue’s December QTR production is out: Discounts crashed from 71% to 66% quarter over quarter. Strip ratios and overburden removal are rising right along with diesel costs as it digs in for better ore to offset the discounts. It has Buckley’s chance of hitting price guidance and costs are a growing problem as well. Net debt
Via AM: United States-based iron ore miner Cliffs has revealed it will accelerate plans to close its mining operations in Western Australia. Cliffs, which owns the Koolyanobbing iron ore complex near Southern Cross, expects the closure to take place this year. The company update was part of Cliffs’ 2017 fourth quarter report, which outlined that
Iron ore price charts for January 26, 2018: Tianjin benchmark fell 45 cents to $74.60. Paper fell Friday night. Steel is holding up. The weakness is impressive given how fast the US dollar is falling. In recent times that has been excuse enough for Chinese traders to buy aggressively. It bears out so far that Chinese