Iron may be found in rocks and minerals in a variety of forms including magnetite, hematite, geothite, limonite and siderite. The base metal is key in the construction of machinery, tools, automobiles, ships, buildings, and more due to its strength and low cost.
Due to the fact that pure iron is very soft, it is most commonly used in the production of steel. Metallic iron is extracted from iron ore and its properties can be modified by alloying it with carbon and various other metals to create steels.
China is the top iron-producing country, and also the largest consumer of the metal.
Unlike most commodities, the majority of iron ore trades under contracts in which major counterparties negotiate annual changes in prices. Vale (NYSE:VALE), the world’s largest iron ore miner, along with the other industry giants Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO), BHP Billiton (ASX:BHP,NYSE:BHP,LSE:BLT) and Australia’s Fortescue Metals Group (ASX:FMG) currently dominate the seaborne iron ore market and often set the price for the entire industry when they negotiate large supply contracts. These four companies have been flooding the market and attempting to push higher-cost producers out as they all continue to ramp up production despite the detrimental affects it has had on the iron ore price.