Iron more price for November 18, 2020: Spot up. Paper is getting a bit silly. Steel has not updated. Empties are falling again: It’s not a great trend. It all looks like typical restocking though Vale may have spooked spot again: Another dam break would be disastrous for Vale and highly amusing for Australia during
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 November 16, 2020: Empties have crashed again: Indeed, yesterday’s China data showed the real estate sector is fading fast. Prices are barely positive. The leading indicator of developer land sales are down 3.3% YTD. New starts are down 2.6% YTD and roughly flat now YOY for a few months. Chinese realty
Iron ore prices for November 15, 2020: Spot down. Paper stable. Steel too. CISA output remains very high. The reason why is vital to understand. Stimulus was not big enough to explain it. Via Gavekal: The imposition of restrictions on real estate financing has slowed land purchases. Robust growth in real estate fixed asset investment
Iron ore prices for November 11, 2020: Spot up. Paper up more. Steel has not updated. Empties are fine: No surprises here. It’s the classic seasonal surge as mills restock for Q1 weather risks. I don’t think prices will go much higher but you never know. No change for me. Firm prices through new year
Iron ore prices for November 10, 2020: Spot up. Paper stalled. Steel has not updated. Empties are still solid: I doubt prices will get much higher despite the year-end restocking pulse. Vale is bringing an extra 50mt or right now. But I still expect firm prices right through Q1 from here, especially if La Nina
Iron ore prices for November 11, 2020: Empties are back bigly: The PBOC has started talking stimulus withdrawal, at Bloomie: China’s central bank once again raised the topic of exiting its monetary easing policies, in sharp contrast to the U.S. and Europe, where a resurgence in virus cases has forced governments there to consider more
Iron ore prices for November 6, 2020: Spot firm. Paper jumped Friday night, presumably on the Biden win, which makes little sense. Rebar is strong. October imports were also strong at 106mt and change. On the US election result, if Biden eases up on China tariffs then that will be bearish for iron ore at
Iron ore prices for Thursday 6, 2020: Everything is pretty much in equilibrium here. Empties included: CISA steel output remains insane: But there are two deal-breakers coming. Vale will be selling at an increased rate of 50mt per annum throughout the fourth quarter after output improvements and having restocked its supply chain. Then it adds
Via The Australian: Uncertainty hangs over Australia’s $149bn in exports to China as a blockade of wine destined for the nation’s biggest trade show in Shanghai has heightened fears that a sweeping ban could follow within days. More than a dozen wine exhibitors at China’s premier trade fair have had their products stopped by Customs
Iron ore prices for November 3, 2020: Spot fell. Paper more. Port inventories are restocking nicely with another six months to run: Empties are fading again. The growth rate trend is down: Brazil had another good month of shipments given October had fewer working days than last year: No change to the outlook. Firm across
Iron ore prices for November 2, 2020: Spot lifted but paper was unchanged. Steel has not updated. The steel PMI improved but is still pretty ordinary: Steel inventories remain huge: Empties are back on track: It looks to me that seasonal weakness is over and restocking has resumed. Expect it to run for another two-quarters
Iron ore prices for October 39, 2020: Spot up but paper down overnight. Steel has rallied in recent weeks so some pressure has come off the seasonal destocking. Empties have rebounded strongly now: The Chinese PMI was solid, driven, as usual, by construction: I will have the more granular steel PMI data tomorrow. So, we’re
Iron ore prices for October 29, 2020: Spot up. Paper to the moon with broader markets. Empties are back on track: Reuters has texture: Iron ore was also supported by lingering concerns over congestion at Chinese ports, and as investors waited for China’s economic blueprint to be laid out at this week’s Communist Party plenum.
Australia could literally bomb Beijing right now and it would happily keep taking our iron ore. The reason is simple. Iron ore is the key commodity input into CCP power. Only by sucking in a billion tonnes of the stuff can it sustain the useless building of empty stuff that keeps folks employed and not
Iron ore prices for October 28, 2020: Spot up. Paper up. Everything up. Empties are back: It is entirely possible that we’ve bottomed here. Year-end restocking is a very powerful force: I can’t see iron ore flying away as global markets melt but buying the crash in miners is a good short term play into
Iron ore prices for October 27, 2020: Spot was firm and everything else soft. Empty apartment sales have rebounded: Whatever the hiccup it is passed. So, I still see weakness over the next few weeks in line with broader markets then a resumption of bullish prices through new year looking for an ultimate top and
Iron ore prices for October 26, 2020: Spot down. Paper firmed overnight as broader markets tanked. Steel is softening. Chinese port inventories jumped above 128mt last week: This remains a bullish story given there is another 32mt to go. That said, the rate of climb is very sharp so mid-2021 will cover it off. Empty
Iron ore prices for October 23, 2020: Spot was down sharply. Paper too. CISA output was still extreme mid-October. Inventories remains stupid My guess is we’re getting ready for a puke lower here. There’s plenty of supply again with much more to come. Chinese demand looks good on an output basis but beneath that leading
Iron ore prices for October 22, 2020: Spot down. Paper down. Empty apartment sales have stabilised but that is not enough. They must grow or steel demand will shrink as catch-up growth rolls off: CISA is bearish: That’s only mill inventories. Trader inventories are also immense, combined for easily the highest ever seasonally-adjusted: There should
Iron ore prices for October 21, 2020: Spot up. Paper up. Really just following broader trends of USD weakness. China’s empties are rebounding: ‘ It looks like sales have been pushed around a lot by stimulus-led discounting waves: But there are still signs of weakness creeping in. Price growth is weak, starts have softened and
Iron ore prices for October 20, 2020: Spot stable. Paper too. Chinese property sales remain questionable: The big news is Vale and it’s not good for prices: Here’s the production resumption timetable: That’s production increases of: 6mtpa more this year. 23mtpa in H1,21. 34mtpa in 2022. 17mtpa in 2023 20mtpa in 2024. 100mt over 2.5
Via Vale today: Vale´s Production Report for the third quarter of 2020 (3Q20) was announced on Monday, October 19th. The company is evolving with its stabilization plan and delivered a strong iron ore production in 3Q20. Nickel and Copper businesses managed to recover productivity for a solid start in 4Q20, after normalizing routine maintenance in
Iron ore prices for October 16, 2020: Chinese empty apartment sales have turned. Let’s see where they go from here: In other news: China-backed consortium SMB-Winning aims to bring blocks 1 and 2 of Guinea’s massive Simandou iron ore deposit into production by 2025, Chairman Fadi Wazni said on Friday. The consortium – which includes
Via Reuters: China is expected to issue new standards for steel scrap at the end of 2020, the official Xinhua news agency reported, in a move that will allow material meeting them to enter the country after a ban on solid waste imports goes into effect. Beijing currently categorises most scrap metal as solid waste,
Iron ore prices for October 14, 2020: Spot down. Paper down more overnight. We’re going lower here. Indeed, I’m starting to wonder if there isn’t a little shock unfolding. Brazil is recovering steadily: More importantly, property sales in China have tanked: A few cities have tightened property curbs for investors in recent months but that
Iron ore prices for October 13, 2020: Spot troubled. Paper too. We should see more price fall before the year end rally. Steel output remained insane in late September: Iron ore imports as well above 108mt: Steel exports are shite still: So are empty apartment sales: Steel output can stay strong through winter: China’s largest
Iron ore prices for October 12, 2020: Spot down. Paper too. Coking coal is flying on the Aussie bans. Chinese empty apartment sales have fallen off the proverbial: While Brazil is doing OK with the virus: Things are looking considerably less rosy here. If those property sale don’t turn soon then iron ore is going