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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The ferrous complex tumbled on February 22, 2021: The big news is this: China is escalating its intervention into iron ore markets by reportedly setting up a single, state-backed platform for purchasing the bulk commodity in a move that could have far-reaching implications on Australia’s top export and its producers. Beijing is planning to make
The ferrous complex boomed anew on February 21, 2022: There are a couple of short-term bullish factors. Ukraine exports 35mt of iron ore that could at risk. WA is reopening and may have some staffing issues for a month as OMICRON infects all and sundry, though the open border and a resumption of FIFO should
The ferrous complex bounced on Friday 18 February 2022 after a brutal week of selling: There is nothing to suggest any improvement in fundamentals. Adjusted for LNY, steel demand and supply look very weak: Westpac’s Robert Rennie is onto it: “Many commodities have critically low inventories, but there’s no sign of that in iron ore
The ferrous complex was hammered again on February 17, 2022 as spot was hit, paper crashed overnight and steel is in retreat: The reasons are obvious: Chinese authority has asked some iron ore trading companies to release “excessively high” inventory and bring the stocks to reasonable levels as soon as possible, following a joint investigation
Another one bites the dust: Origin Energy has brought forward plans to close Australia’s largest coal-burning power station to 2025, seven years earlier than scheduled, as the rollout of clean energy across the country accelerates. The power and gas giant has handed in notice to authorities that it intends to shut down the 2880-megawatt Eraring
Fortescue’s half-year was an eye-popper: • Ongoing improvement in safety with the Total Recordable Injury Frequency Rate (TRIFR) of 1.8 for the 12 months to 31 December 2021, 14 per cent lower than 31 December 2020 • Strong operating performance across the supply chain contributed to record half year iron ore shipments of 93.1 million
The ferrous complex was smashed again on February 15, 2022: Bloomie has more: On Tuesday, some Chinese iron ore trading firms were summoned to a meeting with a trio of powerful government departments — including the markets regulator, the economic planning agency, and the securities regulator — to discuss “abnormal” prices. The companies were warned against
The ferrous complex was hammered again on February 14, 2022: I’m not sure why spot has disconnected from paper but that never lasts long. The bearish fact of the day is this: Excavators sales are an excellent leading indicator for steel demand. Iron ore is a speculative bubble. Fundamentals are equivalent to under $100 and
The ferrous complex was murdered on the evening of February 12, 2022 as the sentiment bubble shuddered: The cause we know: On Friday, the NDRC and the SAMR said they plan to send a working team to some commodity exchanges and major ports to conduct investigation into iron ore market. The team will focus on
The ferrous complex exploded on February 10, 2022 and the sky is now the limit: There are rare occasions in life, or there used to be, when the madness of crowds becomes a spectacle in and of itself. The ferrous complex is now entering one of those periods. As I have said for a few
The ferrous complex flamed out on February 9, 2021: Is this the end? There is nothing fundamental in these prices so it’s impossible to know. What we can say is that given it is mostly sentiment-driven, the bid may be vulnerable to attacks on sentiment, such as this: Iron ore futures slumped from a five-month
The ferrous complex was all over the place on February 2, 2022: I’m not going to pretend that I have any idea what is going on. On fundamentals, the price should be well below $100 and falling. I will note only that despite oodles of coal in China and everywhere else, and fading growth prospects,
The ferrous complex was in a state of hysterical bid on February 7, 2022 as everything melted up: There is no basis in fundamentals for this. Demand is shocking. Inventories enormous. Supply is abundant and the price surge already reopening mines. China is turning hostile to price action and seasonality will turn troublesome shortly. But
It ain’t getting any better in Chinese property. Via GaveKal: The role of construction is huge: -40% new starts equates to -240mt of iron ore demand. There is no sign of this getting any better in H1. Nor will be any infrastructure offset over the year though there will be from H2,21. Iron ore rose
Now, I know I’m the only one tracking reality with any regularity and markets have flown off with little birdies, but occasionally new data comes out that clearly underlines what is actually going on in Chinese property. Today that data is monthly new home sales in China: China’s property sales slump persisted in January with
Wall Street’s commodities bubble is going swimmingly. The latest bucket shop to push the new ‘supercycle’ is Morgan Stanley: Commodities outperformed equities in 2021, but only for the second time in a decade. It didn’t used to be like this: in half the years between 1970 and 2010, commodities beat equities. Given several tailwinds, we
Some days you just have to laugh. The ferrous complex went mad on January 28, 2022: Clearly, there was some whack blowoff going into the Lunar New Year holiday. Is there any actual support for it on the ground? The PMI was out yesterday and said nope. Here’s what it says about the critical end-user
UBS with the note: Supply risk rise as Omicron seeds in Western Australian resources sector In contrast to most other jurisdictions, WA’s pandemic response to date has been akin to an eradication strategy; the State has had very low COVID occurrence. Local media have reported an Omicron breakout at the Kemerton lithium hydroxide refinery near
The ferrous complex powered on January 27, 2022: Clyde Russell is useful today: Iron ore is enjoying a rally built largely on two factors that have yet to eventuate, a renewed building boom in China and possible supply disruptions in top exporter Australia. On the first, any Chinese rebound is, at this stage lacking any
The ferrous complex is reaching into the higher airs as the Ukraine bid charges the market: There is nothing to support this fundamentally, as we see in steel lagging. Chinese property continues to deteriorate: Property sales are terrible. Down 30% on the year along with starts. Funding for developers shows no turn at all: There
The ferrous complex flamed out on January 24, 2022: Not much to report beyond global market jitters. Chinese property is chewing through its problems: China’s efforts to spur asset sales by cash-strapped developers are starting to gain momentum with a flurry of deals involving state-run rivals, potentially easing the industry’s debt crisis. In recent days,
The ferrous complex was still riding the hot money wave on January 22, 2022: Some charts for ya. According to Mysteel, steel output is still very weak: Demand has improved a bit: Thermal coal consumption is roughly flat: Inventories are still fine so power prices should keep falling boosting steel recycling: I will add that
The ferrous complex is blowing off as hot money chases anything on two legs: When we see overnight gains in paper markets like this it is a dead giveaway that global hot money is chasing Chinese easing. One can take this as a signal if we assume that China is on the verge of flood
The ferrous complex was strong on January 19, 2021 as China stimmies worked their Jedi magic:’ A pretty subdued response to new stimmies, all-in-all. My view is unchanged. Chinese property is not fixed and a much larger downdraft in property steel demand is already embedded than anybody has in their numbers. This is still the
The ferrous complex was to the moon again on January 18, 2022 as everything flew with Chinese stimmies: I am still of the view that we will see steel demand fall further this year. As well, China is flooded with iron ore inventory with oodles more to come this year from big miners. Not to
