We have improved our method for quality-adjusting China delivered iron ore costs. We are now using value-in-use (VIU) adjustments where we adjust costs for iron, silica and alumina content as well as lump and pellet premia. In the past we adjusted costs based on iron content alone. The change in methodology has led to a US$3/dmt fall in the weighted average North China delivered quality-adjusted cost from last quarter to US$32.77/dmt. Under our previous methodology, average quality-adjusted China delivered costs would have increased by US$0.30/dmt this quarter, mostly because of slightly higher sea freight costs.
Table of contents
Improved quality adjusted costs
Rise in VIU penalties has pushed up quality-adjusted costs for low-grade suppliers
Tables and charts
This report includes 4 images and tables including:
North China delivered cash cost curve (adjusted to 62% Fe fines basis)