Iron ore producers have enjoyed a remarkable 2017. Prices for 62% Fe fines have ranged between US$54/tonne and US$95/tonne (CFR China) and will average US$71/tonne for the year. As a result, average seaborne export margins increased 33% to US$37/tonne, which is the highest since 2014. Average seaborne cash costs rose in 2017 by 14% to US$35/tonne (CFR China) - the first increase since 2013. Much of the rise in costs was because of uncontrollable factors, especially ocean freight and royalties. But cost increases will not become a feature of the iron ore market. We expect costs to rise by only 1% a year over the next five years. Rising diesel prices and higher strip ratios will be offset by ongoing productivity gains especially from automation. Capital expenditure is estimated to have contracted in 2017 and will fall again next year as the pipeline of greenfield iron ore projects is largely empty for the next few years.