Straight out of the movies this: Trains to be running again within a week.
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Video: BHP’s twisted train wreck
Primary Section
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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Find below our daily feed of market analysis
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Daily iron ore price update (train wreck)
Spot was down sharply. Paper rallied overnight on BHP’s train wreck. Steel looks ready break down. Port Hedland shipments remain weak as miners find all manner of excuses to reduce volumes. They haven’t grown in 18 months. BHP has declared force majeur: BHP does not believe its stockpiles of iron ore at Port Hedland, in
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Daily iron ore price update (peak)
Iron ore prices for November 6, 2018: Spot flat. Paper down. Steel down. Port stocks down to 141.65mt. We appear to be entering the Q4 correction now, delayed by stimulus hopes. They appear to be a little ahead of the curve given the PMIs: Infrastructure is being rolled out to offset industrial production. But only
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Daily iron ore price update (ghost train)
Iron ore prices for November 5, 2018: Spot jumped. Paper too. Because this: A train loaded with iron ore and operated by BHP ran away without a driver for 57 miles (92km) before being forcibly derailed, the company and Australian authorities have said. On Monday, the world’s biggest miner suspended all Western Australian iron ore rail operations while
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Daily iron ore price update (curious inversion)
Iron ore prices for November 2, 2018: Spot down. Paper down more. Steel too. Rebar inventories fell sharply again last week in a normal seasonal pattern. They remain fine. What is interesting is that the moment markets have rallied on a possible trade deal between the US and China, iron ore has begun to correct.
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Is China now building empty apartments at gunpoint?
Let me show you some whacky Chinese housing data from Gavekal. First, the price trend needs to correct: So, too, does inventory, which remains hilarious and starts are making it worse: As we know, macroprudential shut off tier one city price growth two years ago. Price growth has been all in the boondocks since: But
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As BHP hoses cash to foreigners, do recall it’s your kid’s dough
UBS wraps it up nicely for BHP: BHP has today announced that it will return the full US$10.4bn net proceeds from shale to shareholders almost immediately through a combination of an off-market buyback in Nov/Dec 18 (US$5.2bn) and a special dividend of US$5.2bn (~US$1.01ps) payable in January 2019. Further returns expected at the half year
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Daily iron ore price update (crunchtime)
Iron ore price for November 1, 2018: Spot down again. Paper and steel more. The Steel PMI actually held up well as building accelerates. There’s more of that ahead. We’re already seeing a big new infrastructure push. Property is an open question. They say it will reined but so far it’s the opposite. The downdraft
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Daily iron ore price (MOAR stimulus)
Iron ore price for October 31, 2018: Spot and paper flat. Steel down. CISA output for mid-October has begun the seasonal draw down. In news, it MOAR: “The leadership is paying great attention to the problems, and will be more preemptive and take action in a timely manner,” according to the statement Wednesday. The Politburo
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Daily iron ore price update (toppy)
Iron ore prices for October 30, 2018: Spot down. Paper more. Steel OK. Today’s test will be the China PMIs. Pantheon Economics is not hopeful: I am inclined to agree.
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China’s scraptastrophe builds
Bloomie has a little coverage the Chinese steel scraptastrophe today: With tighter emission limits, improved furnace technology and output curbs, mills are using more scrap than ever before, according to Goh Kian Guan, chief investment officer at recycler Chiho Environmental Group Ltd. If a steelmaker is causing too much pollution, “there’ll be a chance they
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Daily iron ore price update (warning signs)
Iron ore price charts for October 29, 2018: Spot down. Paper down more. Coking coal has flamed out. Steel too. Port stocks are rising again, back up to 144mt which at least helps explain recent price moves. There are some other warning signs developing too. Via Vertical Group: ▪ Two of the Key Data Points
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Daily iron ore price update (boomchakalaka)
Iron ore prices for October 26, 2018: Spot up. Paper up more. Steel up. There’s no downside here. Steel inventories are drawing despite massive output. Moderate stimulus is underway and it’s going to turn aggressive as tariffs weigh on industrial output. Xi Jinping has promised MOAR. Coking coal supply is squeezed. It’s boom chakalaka!
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Daily iron ore price update (buy)
Iron ore prices for October 25, 2018: All prices were roughly stable except coking coal futures which are still pointing to heaven. CISA output for early October remains insane. The entire ferrous complex is oblivious to wider ructions as coking coal is squeezed and China pours in stimulus. We bought more major iron ore miners
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Daily iron ore price update (to the moon!)
Iron ore prices for October 24, 2018: Spot gone wild. Paper too. Steel strong. Coking coal supply crunch, building bonanza, Xi put, what’s not to like? To the moon!
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Daily iron ore price update (the good ‘ol days)
Iron ore prices for October 23, 2018: Spot eased. Paper too. Steel is fine. Rebar inventories came off solidly last week showing Chinese building is still booming. And is it any wonder? Reform is forgotten. It’s back to the good ‘ol days of build ’til you drop: We’ll slow and fall through winter but 2019
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Daily iron ore price update (whatever it takes)
Iron ore prices for October 22, 2018: Spot rocket. Steel rocket. And why not. Yesterday Xi Jinping issued his “whatever it takes” moment via Bloomie: President Xi Jinping vowed “unwavering” support for non-state firms over the weekend, the country’s stock exchanges committed to help manage share-pledge risks, and the government released a plan to cut personal
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Daily iron ore price update (ease)
Iron ore price for October 19, 2018: Spot down. Paper up. Steel down. At this stage prices are so high that it’s difficult to see them going much higher. That said, I can’t get very bearish while coking coal supply is constrained despite demand that is going to weaken. Perhaps a trading range up here
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Daily iron ore price update (unusual destock)
Iron ore prices for October 18, 2018: Spot was firm. Paper eased. Steel is solid. Chinese port stocks fell against 142.5mt. They are still high but the destock to date has transpired through a period of rising prices. Although there is no direct link between port stocks and prices (that link is between mill stocks
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Daily iron ore price update (blowoff)
Iron ore prices for October 17, 2018: Spot to the moon. Paper too. Steel strong. Coking coal is the trigger and the Chinese ball of money is rolling. In news, Minas Rio is back: Anglo American Plc should restart operations at its Brazilian Minas Rio iron ore mine in November or December and a planned
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Daily iron ore price update (coking smoking)
Iron ore prices for October 16, 2018: Spot up. Paper up. Steel firm. Coking is still the leader. The complex will run as long as it does.
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RIO slows on fatality
Via RIO: Not rally market moving. Still on track for guidance.
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Daily iron ore price update (flame out)
Iron ore prices for October 15, 2018: Spot eased. Paper fell more. Steel is up again. I still see the complex falling through the end of the year and into Q1 before a solid 2019.
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Daily iron ore price update (all good)
Iron ore prices for October 12, 2018: Spot was up. Paper and steel firm. Rebar inventories are absolutely fine, still up one million tonnes on last year: As production remains mad, via CISA for late September output at 1.98mt: Friday’s trade data was also very much in control with steel exports leveling out around 6mt.
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Daily iron ore price update (bullet proof)
Iron ore prices for October 11, 2018: Spot was down. Paper and steel firm. This market is bullet proof at the moment, supported by coking coal supply disruptions into Chinese stimulus. Fundamentals are not very good for demand over the next six months and that will dawn at some point but for now it’s all
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Daily iron ore price update (off to the races)
Iron ore prices for October 10, 2018: Spot up strongly again. Paper stalled overnight. Steel flat. The story remains coking coal, via Reuters: China’s Dalian coke futures jumped more than 4 percent on Wednesday, as investors worried about tight supplies after the major coal mining province of Shanxi vowed to reduce annual coke output. The
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Daily iron ore price update (breakout!)
Iron ore prices for October 9, 2018: Spot jumped. Paper up more. Steel firm. Rebar inventories jumped 9% over the Golden Week. I can’t get excited. There’s plenty of steel, tipping towards too much. Iron ore at this price is a flood. Coking coal is the only thing holding the complex up. I still can’t
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Daily iron ore price update (coal rocket)
Iron ore prices for October 8, 2018: Spot down a touch but paper is flying. Steel came back firm. Conditions are fading in the steel market with the steel PMI at 52. But coking coal is the story now. Chinese stimulus and supply disruptions have it running mad again. The key is this: On Friday
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Son of BREE gets commodity prices right (finally)
The Office of the Chief Economist has done a better job than I over the past year on commodity prices. Some might say that this is the phenomenon of the “stopped clock” but today we see it again providing sober analysis in its outlook, via The Guardian: The value of Australia’s coal exports is forecast
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Daily iron ore price update (Golden Week)
Iron ore prices for September 28, 2018: Markets are closed this week in China but steel is likely to see more pressure next week: China’s environment ministry issued a stern warning on Saturday to companies across heavy industry not to flout the nation’s tough emission rules — a move seen as quashing speculation that the