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.

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Daily iron ore price update (another slide)

Iron ore prices continued to retract across Chinese exchanges on Wednesday, with Dalian futures hit the hardest – down nearly 10% at one point: The Dalian market regulator is thinkning about cutting position limits by more than half in the wake of the increased speculation, but this may not be enough as demand continues to


Daily iron ore price update (snapback from reality)

The iron ore complex finally took a deep breath yesterday, with prices tumbling across Chinese markets, as the Dalian exchange in particular listening to some steelmaker concerns that speculators are “ruining” (sic) prices. Spot iron ore was off by nearly 6% while futures fell back more than 3%: S&PGlobal were quick to share their view


Daily iron ore price update (1 billion tonnes)

You can’t stop the iron ore juggernaut with spot Tianjin prices up nearly 8% while Dalian iron ore futures jumped nearly 10% as rebar futures also soared upwards on Monday trade: This is supposedly due to the Friday news of another landslide at a Vale mine in Brazil, which resulted in the death of one


How long can China keep building 14k skyscrapers per year?

That’s the question that has plagued me for ten years. Via James White of Lessep Investment Management, at the AFR: If China’s annual residential property sold was built in Eureka Towers (14,000 of them) and one constructed every 65 metres, it would line the Hume Highway from Sydney to Melbourne. In terms of population, 14,000


A quiet warning on iron ore

A sensible suggestion from Matt Canavan: We should apply a levy on exports of iron ore to China. The funds raised can be used to compensate the Australian industries harmed by China’s actions. Our exports of iron ore to China amount to $85bn a year. So even just a 1 per cent levy would raise


How should Australia use its iron ore leverage with China?

Via Sinocism: As China-Australia Ties Worsen, Iron Ore Remains Bulletproof – Bloomberg China has few alternatives as it seeks to stimulate its economy post Covid-19 through infrastructure investment, with Australia accounting for more than half of iron ore shipments globally. If Beijing were to try to purchase solely from non-Australian producers, at best it could


Daily iron ore price update (choked)

Iron ore prices for December 8, 2020: Spot at new highs. Paper flamed out. Steel ahs not updated. Some explanation of recent price strength from Robert Rennie: Our bulk shipping activity models point to surprisingly weak November iron ore exports at 70mt, down from 76mt in October. Given the strength of Chinese iron ore imports


China cuts off nose to spite face as iron ore revenues skyrocket

Via the ABS: Key statistics The seasonally adjusted balance on goods and services surplus increased $1,641m to $7,456m in October. Exports of goods and services rose $1,819m (5%) to $35,720m. Imports of goods and services rose $178m (1%) to $28,264m. Main features Key figures, Seasonally adjusted Aug-20 ($m) Sep-20 ($m) Oct-20 ($m) Change Sep-20 – Oct-20 ($m) Change Sep-20 –


How to politely drop an iron ore bomb on not China

This idea has been around for a while but perhaps its time has come. From The Glass Pyramid: Over the last few weeks the airwaves have been buzzing about the falling national income (and the problems for Mr Hockey’s budget) due to the rapid decline in the price of iron ore and Twiggy Forrest’s calls for restraint