Iron ore price breakdown between grades

The iron ore market is a true beast on the world commodities stage, with over a billion tonnes of iron ore fines being traded in the seaborne market each year. It is a market which moves the value of producer currencies and has such international scale that it moves the price of world freight markets.

It is also a market which has seen tremendous change over the last decade; the main customer shifted, the way it is priced morphed from an annual price to a largely index-linked market and a futures market has taken off, which is now larger than the size of the physical market.

In recent 'post-indexation' times, there has been a pronounced disconnect between the value of different iron ore grades, which is linked not only to environmental concerns at the biggest buyer (China), but also to the economic efficiency of converting iron ore to steel.

This disconnect poses a problem as the amount of material at risk of 'mispricing' is not trivial, but hundreds of millions of tonnes.

For more information - see the article attached below: