Spot eased. Paper was bashed Friday night. Steel is going nowhere, a standing warning for the bubble. The charts for June 14, 2019: Reuters has more: China’s Dalian Commodity Exchange said on Friday that it would raise trading limits and margins for the iron ore futures contract for September delivery , effective from June 18.
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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Spot took off. Dalian paper went even more nuts overnight. Singapore is more sober. Steel is not following which is a tell that this will not last long. Iron ore prices for June 13, 2019: So, how long? Ask Vale, via BNAmericas: Brazilian mining giant Vale expects part of its iron ore production halted by court
Iron ore prices for June 11, 2019: Spot and paper mad. Steel followed. Port Hedland shipments rebounded in May but they are clearly also down a little on where they should be. The proximate cause for the price spike was falling Chinese port stock, China cutting petrol prices and the global rally but, in reality,
Iron ore prices for June 10, 2019: Spot up. Paper up more. Steel is struggling. Iron ore port stocks fell again last week to 121.6mt. The pace of decline has slowed marginally. Some are calling for $120 again: Amid the supply crunch, demand for iron ore could pick up again in the coming weeks, according
Iron ore prices for June 5, 2019: Nothing burger action. From Argus: Brazil’s iron ore exports remain on the recovery track, with May shipments totalling 29mn t, up from 18.3mn t in April, economy ministry data show. But exports were still 16pc below May 2018, following April’s 29pc decline on the year. Brazilian iron ore
Honestly, they never learn. This time from Alexandra Heath, Head of Economic Analysis at the world’s happiest central bank: Introduction Good morning and thank you to the AMEC for the invitation to be here today. The resource sector makes a significant contribution to the Australian economy. It accounts for about 20 per cent of business investment and almost 60 per cent
Iron roe prices for June 4, 2019: Spot up. Paper soft. Steel stable. Things have calmed down on demand fears but don’t forget seasonality. Chinese demand is weak through mid-year as summer rains crimp construction: If Brucutu does not return by July/August, and/or the trade war slowdown takes a breather, then it will be off
Iron ore prices for June 1, 2019: Spot splat. Paper worse. Steel is still fine. Rebar inventories are almost exactly the same as last year, healthy. China steel PMI pulled back to 50 in May with new orders down sharply to 46.7. It appears demand headwinds are mounting amid the trade war and that’s been
Spot down. Paper was bashed lower by higher DCE trading fees. Steel is stable. The FT is wrong: Steelmakers are feeling the profit pinch. There are hints of overcapacity problems ahead for Chinese producers. There, the price of hot rolled coil, a widely traded steel commodity, remains down double digits year on year. …This year
Time to ask the really hard question. Chinese anger at the trade war has turned its policy making utterly irrational, via the CPC foghorn: Mining of rare earths is conducted in Baiyunebo, North China’s Inner Mongolia Autonomous Region on July 16, 2011. File photo: VCG China indicated Tuesday night that it may weaponize its rare
Iron ore prices for May 24, 2019: Spot up. Paper roared overnight as port stocks tumbled again last week 127.7mt. Steel is riding the coat tails. But it’s not all good on that front: China Steel Corp (CSC, 中鋼) on Friday announced that it would cut steel quotation prices for domestic deliveries in the third
Via FreightWaves: According to chief executive officer Birgitte Ringstad Vartdal, “Golden Ocean’s first-quarter results reflect a weaker market environment brought about by disruptions in the iron-ore trade.” She explained on the conference call with analysts, “Going into 2019, there was strong conviction in the market. Additional tons of iron ore were to come from Brazil
Iron ore prices for May 22, 2019: Everything ripped the roof off. Goldman says sell, at the FT: The combination of strong demand and weak supply has pushed prices up almost 40 per cent since January to a five-year high of $103 a tonne, according to a price assessment by S&P Global Platts. While that
Dalian iron ore still marching higher: Via Reuters: Steel mills have been operating at low inventory levels and only purchasing hand-to-mouth from ports due to high raw material prices. Market estimated that average iron ore stocks at mills have fallen to around 20 days of use, down from normal inventory levels of 30 days. Ore
Iron ore prices for May 21, 2019: Spot up. Paper up. Steel up. Vale down: Brazilian mining company Vale has suspended freight transport on a portion of its Vitoria-Minas railroad as a precautionary measure against the risk of a breach at the Sul Superior tailings dam, which is connected to the closed Gongo Soco iron
Iron ore prices for May 17, 2019: Be upstanding for the tone, something I thought we would never see again. Paper is still flying. Steel is stuck. Remember that this is the weakest seasonal period. Unless Brucutu comes back, H2 is going to see $120 as China keeps stimulating to offset the trade war.
Iron ore prices for May 14, 2019: Spot, paper and steel down. Just goes to show that if the trade war takes pre-eminence in the months ahead then the shock to the global economy, largely through crashing equities, will damage Chinese steel demand before any stimulus can offset it. Quite a tug-of-war we’ve got going
Iron ore prices for May 13, 2019: Spot down. Paper up. Steel down. The paper market is placing its stimulus bets after the trade deal collapsed. Spot was not interested but will likely follow in due course. MOAR credit hitting the supply crunch is a juicy prospect. Though if the broader market correction gets out of
Via Reuters: The NDRC last year had ordered local governments to help broker deals between zombie firms and their creditors, and to draw up restructuring plans by June 2019. Steel mills will also be encouraged to launch large-size scrap recycling and processing centres and to adopt electric-arc furnaces that only use scrap metals to make