Iron Ore Price Surges to New Annual High

Monday, December 21, 2009

The Steel Index (TSI) daily iron ore reference price hit its highest level in 12 months on Dec. 18, reaching $107.4 per dry metric tonne. This reference price, for 62% Fe content fines CFRFO China port, represents an 82% increase since March, when the price dipped to $59.1/dmt.

The price hit its previous high in August, before falling back sharply to $76.1/dmt in September. Since then prices have been volatile, with this week alone seeing an increase of 5.2% despite falling freight rates on the key routes into China.

“In my opinion, the levels we’ve seen in the spot market this week are as a result of tightness in supply and continued Chinese demand. I don’t see the market correcting for a least another week or two,” saif Jerry Yu a Hong Kong based trader. “It’s anyone’s guess what 2010 will bring.”

The volatility and rising spot price creates a challenging background for the forthcoming iron ore benchmark price discussions between the Chinese steel mills and miners for next year. At current freight rates, the spot price is some 45-50% higher than the FOB fixed contract price agreed between the Japanese steel mills and Rio Tinto in mid 2009. No agreement on a benchmark iron ore price was reached with the Chinese steel industry in 2009 and many are skeptical that any agreement is likely for 2010.

“In this environment miners, traders and steel mills are increasingly looking to index-based iron ore pricing arrangements, often in parallel with financial swaps to manage their price risk” said Steven Randall, Managing Director of TSI. “The growth in the use of iron ore swaps this year has been nothing short of spectacular. Over $500m of iron ore swaps have been cleared using TSI’s index over the past 7 months. No other commodity has seen this speed of take-up.”

TSI’s iron ore index is used for settling over-the-counter cleared swaps. The Singapore Exchange and LCH. Clearnet both offer cleared iron ore swaps contracts settling exclusively against the monthly average of TSI’s daily 62% Fe iron ore reference prices published in the expiring month.

Maritime Today


The Maritime Industry's original and most viewed E-News Service

Maritime Reporter April 2016 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Finance

Pirates Switch to Kidnapping Crew as Oil Fetches Less

Pirate gangs in West Africa are switching to kidnapping sailors and demanding ransom rather than stealing oil cargoes as low oil prices have made crude harder to sell and less profitable,

Baltic Index Down for Third Straight Session

The Baltic Exchange's main sea freight index, tracking rates for ships carrying dry bulk commodities, fell on Tuesday for the third straight session, as demand for bigger vessels weakened.

Kongsberg, DNV GL Partner to Reduce Training Costs

Kongsberg Maritime has entered a partnership with class society DNV GL to issue Product Certificates for Maritime Simulator Systems required by maritime training

News

Wind-powered Oil Recovery Project Green-lighted

The DNV GL-led WIN WIN Joint Industry Project (JIP), which melds offshore wind with offshore oil and gas, shows that for suitable fields,finds that  wind-powered

Maersk Line Names Hahnemann Chief HR Officer

On August 1, 2016, Ulf Hahnemann, current Vice President for Strategic Programs at Mars Inc. will join Maersk Line as Chief Human Resources Officer (CHRO) and be

US Coast Guard to Unveil Historic Lifeboat

A ceremony unveiling a historic lifeboat as a new static display in Chatham, Mass. is scheduled for 11 a.m. Friday at U.S. Coast Guard Station Chatham.   The

 
 
Maritime Careers / Shipboard Positions Maritime Security Navigation Pod Propulsion Salvage Ship Repair Ship Simulators Shipbuilding / Vessel Construction Sonar Winch
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.0804 sec (12 req/sec)