Iron ore prices for September 22, 2020: Empty apartment sales have softened: China is struggling big time to lift the consumer as they save their butts off: Which leads only to the conclusion that MOAR empty apartments and MOAR bridges to nowhere are coming. Brazil is slowly doing better with the virus: I still see
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 September 18, 2020: Everything up. CISA early September production easing as it usually does, from amazing levels. I’m still looking for a larger seasonal drawdown of the entire ferrous complex in the weeks ahead. Empty apartment sales are still fine: Vale is still getting buffeted by criticism, via Reuters: Vale SA
The Australian dollar is up and about after more preposterous ABS jobs numberwang: Bonds are selling a little: As are stocks. I still favour some more correction: Big Iron is copping it with FMG hammered. This is a classic seasonal BTFD over the next month, in my view (which is not advice): Sad to say,
Via UNHCR today: Extractive industries 15. In January 2019, 270 people died when Vale’s Córrego do Feijão tailing dam in Brumadinho collapsed.13 Most of those killed were Vale workers having lunch in the cafeteria located directly below the tailings dam. The force of the toxic mud dismembered bodies, and shattered what was a bucolic community.
Iron ore prices for Septemeber 15, 2020: Baseline is last week’s prices. Overnight futures copped it. Spot prices remain strong: Steel is holding up: Yesterday’s China data cleared up any mystery about why prices are high with crazy steel output: As well, mills have a long way to restock iron ore inventory: This restock has
At around one-third of total exports, iron ore is not quite Chile’s copper or Norways’s oil at roughly half their exports, but it’s mighty big: It gets close to half if you add coking coal, which is the same trade. Given everything else to China is going to shrink hence, the steel bulk commodity’s share
Iron ore prices for September 7, 2020: Spot still strong. Paper too. China imported 100.4mt of iron ore in August: I still think we’re roughly at peak imports. Steel exports were buggered, as you’d expect: Empty apartment sales are softening: To wit: China Evergrande Group kicked off a nationwide sales promotion with its deepest ever
Iron ore prices for September 4, 2020: CISA steel output remains outrageous: The key driver, empty apartment sales, remain strong: And it’s not just sales, it’s inventory, at SCMP: China’s biggest developer are likely to step up price discounting this year to clear a growing pile of unsold homes, with authorities sounding another alarm in their
Via AFR comes an article titled China’s African iron ore adventure will be filler, not killer: China’s ambition to build an alternative iron ore industry in Africa will push down iron ore prices by a maximum of $US8 ($11) per tonne, hosing down suggestions it will be a “killer” for Australia’s biggest export industry. …SMB-Winning
Via SCMP: Iron ore miners‘ and steel producers’ increasing use of the Chinese yuan will increase its internationalisation, reduce China’s vulnerability to any possible US financial sanctions, and help the domestic economy in line with the new “dual circulation” strategy. By using the yuan rather than the US dollar to price iron ore, this will
Daily iron ore price update for Sep 3, 2020: New highs and my $130 target reached. But not for long given futures pricing overnight. Chinese empty apartments still strong (and they’re back at the movies): No change to my outlook. Seasonal weakness ahead. Higher into New Year. Top in April or June as Vale brings
Iron ore prices for September 1, 2020: Still strong pricing action. Chinese empty apartments likewise: And Brazilian virus: Brazil released export numbers yesterday and they were OK but nothing great: Volumes are nearly restored to pre-COVID levels so that is some risk out of the market. But it remains to be seen if volumes can
Via the AFR: China has slapped a ban on Australia’s biggest grain exporter – a co-operative with about 4000 farmer members – after claims customs authorities found pests in a shipment of barley. China customs suspended barley imports from CBH, based in Western Australia and run by former BHP iron ore boss Jimmy Wilson, on
Iron ore prices for August 31, 2020: Prices are still strong but the China steel PMI is fading, down 47 headline and 45.6 new orders: New exports orders are disastrous at 35. There were flood disruptions. But overall, we are back at levels I would normally associate with price deflation. Property sales still look fine:
I’ve been arguing this week that both Twiggy Forrest and Gina Rinehart would be wise to consider a float of their respective iron ore businesses in the near future. The reason is straightforward. The iron ore trade is at a cyclical high just as Chinese global relations are undergoing a structural deterioration as Beijing launches
Iron ore prices for August 26, 2020: Spot up. Paper up more. Steel has not updated. Chinese daily empty apartment sales are still fine: Brazil is still sick: And there is much more Chinese restocking to do. That said, my earlier worries about rebounding Vale volume are resurfacing, via Bloomie: By at least one measure,
Iron ore prices for August 25, 2020: CISA steel output remains huge: As empty apartment sales rise: More: In other news, there was a mysterious crash in Australian exports in July, at the AFR: Iron ore exports to China fell 12 per cent or $1.11 billion to $8.12 billion, while coal exports to the country
Via the FMG true believers: Sitting atop a cash machine disguised as Australia’s third-largest iron ore miner, Fortescue Metals Group chief executive Elizabeth Gaines was justifiably emphatic about the importance of Australia’s increasingly testy trade relationship with China. “We can’t lose sight that we are a trading nation,” she implored, adding that the miner “didn’t
Iron ore prices for August 24, 2020: There are port problems that are clearing: The China Iron and Steel Association (CISA) said on Tuesday that iron-ore discharging difficulties and port congestion issues are likely to ease in mid- or late-August as the weather improves and the coronavirus is under control. This is old news but
Via FMG this morning It’s halftime in the MB versus Twiggy great game. We won the first quarter up to 2015 as FMG nearly went under. Twiggy handed us a toweling in the second quarter as FMG rebounded thanks to a fantastic string of good fortune in Chinese rationalisation, Brazilian accidents and global pandemics. But