• Bulk commodity prices have been mixed recently with coal prices generally stabilising around recent lows, while iron ore prices have performed surprisingly well, supported by recent signs of improvement in the Chinese economy.
• Growth in global crude steel production remains subdued in line with softer demand relative to last year; Chinese GDP growth has slowed for seven consecutive quarters. Steel prices in China have risen recently on restocking demand and anticipation of additional investment stimulus.
• The average spot price for iron ore increased in October to around US$114 per tonne (CFR Tianjin), after bottoming at US$86.7 per tonne in early September. The current spot price is around US$120 per tonne.
• The average price for thermal coal shipped from Newcastle (FOB) fell by 7 per cent in October, following a 1 per cent decline in September.
• We have kept our coal price forecasts largely unchanged, but have revised up near-term iron ore prices to reflect the faster than expected recovery. Near-term demand conditions have improved but remain uncertain. Longer term fundamentals are still positive, helping to sustain historically elevated price levels, although downside risks are significant.

For further analysis download the full report.

• Bulk Commodities Market Update – October 2012 (PDF 284KB)