Home >News & Politics >Francis Browne - Platts - What's driving iron ore prices?

Francis Browne - Platts - What's driving iron ore prices?

Date post:27-Jun-2015
Category:
View:338 times
Download:0 times
Share this document with a friend
Description:
The Americas Iron Ore Conference is one of the most respected annual gatherings for North and South American iron ore markets and the agenda covers: iron ore industry and market developments; new project developments and expansions in North and South America; overview of steel demand; iron ore spot market price; infrastructure and transport challenges and investment opportunities. For more information please visit: http://bit.ly/1vlo1DD
Transcript:
  • 1. 2013 Platts, McGraw Hill Financial. All rights reserved.Whats driving iron ore prices?Francis Browne, Editorial Director, Price GroupAmericas iron ore, Rio de Janeiro, November 10th, 2014

2. AgendaPrice review, physical and forwardSupply base, brands and impuritiesSize matters; pellets, lump and concentratesThe Atlantic basin29 3. Introducing PlattsFounded in 1909, Platts is the worlds largest energy and metals information providerEvery day, more than US$10 billion in trading activity and term contract sales are based on PlattsPlatts brings transparency to the market30Price Reporting$Breaking News!AssessmentsMarket Reports 4. Platts Global PositioningMore than 1000 professionals across 20 officesOver 10,000 customers in over 150 countries31SingaporeBeijingShanghaiHong KongTokyoMelbourneLondonMoscowDubaiSao PauloBuenos AiresNew YorkWashingtonHoustonPittsburghBostonDenverEvergreenHightstownWestminster 5. Platts Focus: The Spot MarketSpot prices are established at the marginTerm contracts are priced on spot market assessmentsDerivatives settle off spot prices32Platts assessments 6. IODEX physical and paper33 7. Chinese steel prices34 8. Steel prices in China have reduced35 9. Physical and derivative markets360.80.850.90.9511.05SHFE RBTang BilletIODEXDCE 10. Chinese steel margins37 11. Chinese domestic concentrate prices38 12. DCE volume in millions of metric tons39020040060080010001200Oct-13Nov-13Dec-13Jan-14Feb-14Mar-14Apr-14May-14Jun-14Jul-14Aug-14Sep-14Oct-14 13. SHFE rebar volume in millions metric ton400100200300400500600 14. SGX iron ore derivatives in metric tons41 15. Price correlation or convergence?420.80.850.90.9511.05IODEXDCE 16. DCE delivery and IODEX window do not converge43DCE most liquid contract is always ahead of IODEX delivery window 17. DCE active month now switches to May 1544 18. Focus and Relevance45Platts benchmarks are used to price term contractsFutures settlements are often tied to spot market Platts coversDerivatives price out against Platts spot price assessments or futures settlementsFuturesOTCDerivativesTerm ContractsSpot 19. Spot activity concentrated around cargoes arriving 4-5 weeks after transaction date (middle of 2-8 week forward assessment window)05101520253035404502468101214161820222426283032343638404244464850525456586062646668707274Number of cargoesDays forward from transaction dateCargo delivery timings by originAustraliaBrazilIndiaSouth Africa(Spot transactions observed Jan-Dec 2012)Source: PlattsConcentration of spot activity determines the mid window that is the target of Platts normalization for timing 20. Spot activity concentrated around cargoes arriving 4-5 weeks after transaction date (middle of 2-8 week forward assessment window)05101520250246810121416182022242628303234363840424446485052545658606264666870Number of cargoesCargo delivery timings by originAustraliaBrazilIndiaSouth Africa(Spot transactions observed Jan-Dec 2013)Source: PlattsConcentration of spot activity determines the mid window that is the target of Platts normalization for timingDays forward from transaction date 21. Spot Activity Concentrated Around Cargoes Arriving 4-5 Weeks After Transaction Date (Middle Of 2-8 Week Forward Assessment Window)48Concentration of spot activity determines themid-window that is the target of Plattsnormalization for timingSource: PlattsDays forward from transaction date 22. Prompt Deal Carries Time Premium in a Backwardation49135137139141143145147149WeeksPremium0Mid window820Deal at $145 for cargo arriving 3rd week forwardMid window: Target point of normalizationDeal at $140 for cargo arriving 7rd week forward 23. Where does the data come from?50 24. Grade differentials to IODEX 6251 25. Steel demand/price impacts iron ore diffs52 26. More differentials and size data53 27. Meeting our IOSCO commitments54 28. Methodology updateProviding more information and transparency 29. We launched a separate freight report56 30. What's done and what is being consideredDec 13: Launched a low Alumina 58% Fe assessmentJune 14: Launched daily 1% impurity differentialsJuly 14: Launched Dry Bulk Freight WireQ414: Research specification changes to the 65% Fe assessmentH115: Research volume change to the IODEX specificationOffer more data and analysis through technology partnerships such as MVS57 31. Thank youHappy to answer questions and discuss price assessment methodology

Popular Tags:
of 31/31
© 2013 Platts, McGraw Hill Financial. All rights reserved. What’s driving iron ore prices? Francis Browne, Editorial Director, Price Group Americas iron ore, Rio de Janeiro, November 10 th , 2014
Embed Size (px)
Recommended