Fall in iron ore price prompts rethink on grade differentials

As the iron ore market gathers in the Czech capital of Prague this week, a reevalution of iron ore products may be underway, based on lower pricing and changes in supplies. This may be increasing an urgency to stay competitive and secure attractive outlets. An overriding issue will be the recent 40% or so decline in reference spot fines prices delivered to China in the past three months. In a twist of fate, prices are trending close to where they were a year ago, falling back after a peak late 2016 and strengthening further into Q1. However, more than the latest price decline, regional pricing premiums in segments such as pellets, concentrates and lump may be increasingly fought out. These premiums are taking on a larger share of overall pricing, given the sharp decline for fines. A focus on defeating effects from higher silica content from southern Brazil ores and care around phosphorous levels remain key areas in procurement executives’ plans. At the same time, the huge relative discounts now on offer for lower grade, and higher alumina fines, may make new combinations and Australian ores in new markets more attractive. The buyers coming together with traders, miners and service

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Source: CTRM Center

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