Iron ore costs on a value-in-use adjusted basis have fallen only US$0.07/tonne from the previous quarter. This is the slowest rate of cost reduction for more than two years. The limited cost reduction has been caused by uncontrollable factors; namely higher sea freight costs and higher iron ore prices. But higher iron ore prices are clearly a good thing for producers. With costs stable and prices rising we estimate iron ore margins are at their highest since early-2014.