Iron ore’s market pricing dynamic is somewhat divorced from underlying fundamentals
Launceston, Australia — Imagine for a moment that iron ore was still priced the way it was for decades — in closed-door meetings between miners and steel makers — and then try to visualise what the current level would be. Whatever number you may have come up with, it’s unlikely to be anything close to the $76.57 a tonne iron ore futures traded in Singapore fetched at the close on Monday. It’s likely that it would be a far lower figure, given the current seaborne market dynamics of ample, and growing supply, and reasonable, but no longer, surging demand growth. But the main difference between the long-term contract talks that prevailed up until about 2010 and the current system of short-term deals and spot pricing is the volatility of seaborne iron ore prices. The SGX futures, which mirror the spot price for cargoes delivered to China, is up 7.4% in the first half of January, part of a longer rally that has seen it surge about 31% since the start of November. Normally a gain of this ...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.