China’s quest for cleaner skies drives change in iron ore market

The iron ore market’s structural change last year is all to do with the environment, and led by demand patterns in China. Iron ore with a higher content of iron, Fe, allows a reduction of coal usage in the steelmaking process, lowering carbon emissions. So trade has shifted away from the standard 62% Fe-quality base – the traditional iron ore benchmark product – to a multi-tier market. This includes specialty products that may be tailor-made for specific steel mills, with premiums, penalties and spreads between product values quite the order of the day. “We’re carving the market up into segments: more and more we’re talking about high and low grade,” said Alex Griffiths, principal analyst, steel and iron ore markets with Wood Mackenzie. Until late 2016, analysts note, there was no premium for the iron units in iron ore fines with a 65% Fe content. In July last year, with demand for high-grade iron ore soaring, the premium for these units leapt to 37% above the 62% grade price, slipping back to 16% at year-end.  The basic 62% commodity grade no longer calls the shots. Has iron ore “decommoditized”?  Peter Poppinga, ferrous and coal executive director of Vale, the world’s… continue reading

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Source: CTRM Center

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