Iron Ore Prices Fall by More Than 20% in a Month on World Economic and Debt Worries.
Prices of seaborne iron ore imported into China have fallen by more than 20% in a month, from a peak of $186 per metric ton (/mt) on April 20, 2010 to $147.5/mt on Monday, May 24, 2010, according to Platts data. Platts is a leading global energy and metals information provider and on June 2, 2008, became the first independent publisher to provide daily price assessments for iron ore reflective of the transactable value in the spot open market.
The drop in value of this benchmark iron ore – the key steel-making ingredient shipped into China, the world largest steel maker – mirrors similar declines for basic raw material commodities around the globe. China imports more than 60% of the world's seaborne iron ore supplies.
"Concerns over sovereign debt in the Eurozone seem to be hitting all key commodities globally," said Jorge Montepeque, Platts director of market reporting. "These primary industrial inputs are being affected by the recent market bearishness over concerns of possible economic contraction and thus, resource need reductions, resulting from the broader sovereign debt."
Prior to Platts' introduction of daily price assessments in this benchmark iron ore, known as IODEX and reflecting 62% Fe (iron) content, the commodity's pricing was traditionally established by the iron ore industry through a once-yearly single auction and long-term contract process.
Steel prices are also on the retreat, Platts data shows. Hot rolled coil, the base material for the automotive and so-called white steel good industries, is also being knocked by the bearish tone in many world markets, says Francis Browne, Platts global director of steel and metals market reporting. Prices for steel coil destined to Europe and the Middle East have lost more than $80 per metric ton over a similar month-long period as for iron ore, with base steel material now trading at $585/mt in the Black Sea, a price level not seen since March 25, 2010, he said.
"History shows a tight correlation between economic concerns and the down-trending financial markets to base materials prices," explained Browne. "For example, iron ore hit a low of $57.00 per metric ton in November 2008 at a time when the 'credit crunch' buffeted financial and commodity markets."
Platts' price assessments are underpinned by a robust methodology of guidelines and quality protocols. Its IODEX assessments are based on all-day market monitoring and data collection of transactions, bids, offers and other information from market participants during the Asian business day until the market close at 18.30 hours Singapore time. The data is normalized and a neutral origin 62% Fe content iron ore fines price assessment is published immediately in Platts' Metals Alert (PMA), a real-time metals price and news wire service. The data is published again at the end of the U.S. trading day in Platts' Steel Markets Daily, an online and print publication that offers news, market commentary and price information aimed at the steel, construction and auto industries as well as commodities-focused money managers worldwide.
Platts has been publishing information on the metals markets and assessing metals prices in for more than 35 years, drawing on the tradition of its parent company, The McGraw-Hill Companies, which has provided news and intelligence on the metals markets since 1930.
In addition to 62% Fe iron ore, Platts also provides physical market price assessments for 63.5/63% Fe, high-grade 65% Fe and a low-grade 58% Fe, as well as a daily 1% per Fe content differential for 60-63.5% iron ore fines to help clarify the normalization process. Platts also publishes daily freight netbacks based on the most liquid routes to five basis origins.
About Platts: Platts, a division of The McGraw-Hill Companies (NYSE:MHP - News), is a leading global provider of energy and commodities information. With a century of business experience, Platts serves customers across more than 150 countries. An independent provider, Platts serves the oil, natural gas, electricity, emissions, nuclear power, coal, petrochemical, shipping, and metals markets from 17 offices worldwide. Platts' real-time news, pricing, analytical services and conferences help markets operate with transparency and efficiency. Traders, risk managers, analysts, and industry leaders depend upon Platts to help them make better trading and investment decisions. Additional information is available at http://www.platts.com.
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