Brazil will become the lowest-cost iron ore supplier to China in 2017 (on a quality adjusted basis). This is because of the ramp-up of Vale's Carajas - Serra Sul (S11D) mine and an increase in Fe-grade premiums. Fortescue Metals will retain its position as the lowest-cost supplier on an unadjusted basis, but once costs are adjusted for its low-grade product it becomes the highest-cost of the big 4 iron ore suppliers. With iron ore prices averaging above US$80/tonne so far in 2017, almost every producer is cash positive and margins are at their highest level since we started tracking them in 2013. High prices also raise the possibility of closed Chinese capacity re-entering the market.