Financial Times has a good interactive feature on iron ore prices. Iron ore is a very important commodity that is still traded in two separate trading systems – a transparent spot market, and an intrasparent system of benchmark prices. The FT notes the current shift from benchmark to spot prices.
Comment: Looking at the forecast production and export maps, it is quite obvious that some countries – China, Australia and Brazil are the hotspots of the iron ore market. The movement toward spot prices can create new opportunities on the market, but it can also fuel volatility.
Who can profit: Mining companies can and will profit from rise of demand for steel products. Steelmakers, however, face a tougher challenge in strategically positioning their investments on the market. The big steel makers SHOULD profit from a more volatile market only if they have the pricing strategy capability in place.
Who can lose: Everyone else. Volatile steel prices can add a burden to the global economy, and the direction of volatility is also worrying. Just like oil, high steel prices send shockwaves throughout economies. Here’s a short list of steel-intensive infrastructure and industries: roads, railways, power generation, household appliances, construction and manufacturing industries.
Comment: Looking at the forecast production and export maps, it is quite obvious that some countries – China, Australia and Brazil are the hotspots of the iron ore market. The movement toward spot prices can create new opportunities on the market, but it can also fuel volatility.
Who can profit: Mining companies can and will profit from rise of demand for steel products. Steelmakers, however, face a tougher challenge in strategically positioning their investments on the market. The big steel makers SHOULD profit from a more volatile market only if they have the pricing strategy capability in place.
Who can lose: Everyone else. Volatile steel prices can add a burden to the global economy, and the direction of volatility is also worrying. Just like oil, high steel prices send shockwaves throughout economies. Here’s a short list of steel-intensive infrastructure and industries: roads, railways, power generation, household appliances, construction and manufacturing industries.
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