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
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 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
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
Iron ore prices for December 17, 2020: Spot is going to new highs today after paper blasted off last night. Steel is still rising so some inflation is being passed on. There is no near term end to this: Chinese demand is excellent; Chinese inventories are short; ex-China demand is recovering; DXY is getting hammered;
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
Via Goldman: Growth to feel the weight of policy normalization in 2021While the near-term growth picture looks encouraging, tightening is clearly the direction of travel when it comes to policy. To be clear, we expect stable policy rates and no hikes in OMO or MLF rates next year. This is because interest rates have mostly
Iron ore prices for December 14, 2020: Spot flamed out. Paper too. Steel has not updated. Yesterday’s outburst in Beijing about unfair trade practices managed a little correction. But, fear not, such tantrums are typical for this time in the cycle. Beijing and CISA have been spitting the dummy during price spikes like this for
Iron ore prices for December 11, 2020: Spot up again. Paper as well. Steel has not updated. Records are tumbling. As iron ore roars higher: It is only $7 below its all-time AUD high: As Dalain futures hit their all-time high: China is not happy, whinging like a stuck pig: China’s steel industry body has
Iron ore prices for 10 December 2020: The news flow is relentlessly bullish. La Nina fears are realised, at Reuters: Pilbara Ports Authority said on Thursday it has started to clear large vessels out of Port Hedland, the world’s biggest iron ore export hub, as it issued a cyclone warning. A tropical low located some
Iron ore prices for December 9, 2020: Spot goes up no matter what. Paper is on fire again. Steel is stuck and margins are collapsing. Never underestimate the iron ore market’s ability to move far and fast. Few markets are so pure in terms of price responsiveness to supply and demand shifts. Right now we
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
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
Iron ore prices for December 7, 2020: Spot booming. Paper too. Steel stalled with margins for mills getting crushed. Brazilian November exports fell to 31mt: I don’t know what Vale is doing. It’s supposed to be increasing volumes. Chinese imports were down in November too: Still bullish on prices for the next six months.
Take that Beijing! Iron ore prices for December 5, 2020: Spot to the moon. Paper rolled forward. Steel is not keeping pace and output is steadily diminishing as the year winds down. Steel inventories have been easing and port stocks have stopped climbing but neither of those explain this. Supply may not be abundant but
Iron ore prices for December 3, 2020: The red hot rally continued overnight. Steel is not going with it which is a standing warning. Another is this little snippet from Reuters: Brazil’s Vale trimmed its 2020 output guidance to 300 million to 305 million tonnes, from a previous target of at least 310 million tonnes.
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 –
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
Iron ore prices for December 2, 2020: Spot out of control now. Anything is possible when this kind of hoarding cycle happens. The Chinese iron ore inventory build has paused at 130mt. The ongoing hoarding is the number one support to prices over the next six months, adding some 80mt per annum to apparent demand:
Iron ore prices for November 27, 2020: Spot hit a six-year high. Paper is lagging. Steel has not updated. Empties have stabilised again: I wouldn’t expect us to get much higher but it’s quite possible. Especially if we see some Q1 supply disruptions with La Nina. No change from me. Strong pricing through Q1 then
Iron ore prices for November 24, 2020: A weak response to the global fireworks from spot. Paper too. Perhaps some of the obvious cooling in underlying Chinese demand drivers is starting to permeate the market. Empties are still trending lower: Moreover, post-COVID global normalisaion is iron ore bearish. We can already see this in China’s
Iron ore prices for November 23, 2020: Spot hit. Paper too. Steel has not updated. Empties are still trending lower: The AFR is all guff all of the time: “We’ve seen China’s steel demand comfortably at all-time highs for some months now,” said NAB head of commodities research Lachlan Shaw. “[But] what was missing was
Iron ore prices for November 19, 2020: Everything up! You will read elsewhere that Chinese demand for steel is booming and that is driving up prices. This is wrong. This is pure seasonality and iron ore is driving up steel prices despite record-high inventories seasonally-adjusted: This is the year-end restock I have warned about for
Iron ore prices for November 19, 2020: Spot up again. Paper stalled overnight. Steel is excited for no apparent reason. There’s still more inventory than at any time ever: And empties are trending lower: I don’t expect activity to fall off a cliff or anything but underlying demand is not going to grow too much