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6 Pages

High-grade iron ore premium set to fall with coking coal prices


High-grade iron ore premium set to fall with coking coal prices

Report summary

High coking coal prices have incentivised Chinese steel producers to purchase more high-grade iron ore fines. As a result, the price gap between high-grade and low-grade fines has widened to a four year high. This insight explores the rationale of this phenomenon by analysing the cost of ironmaking in three different Fe grade scenarios. When coking coal prices are high, steelmakers can reduce costs by using more high-grade iron ore fines. However, we believe the generous premium enjoyed by high-grade iron ores could be short-lived and looks set to diminish for two reasons. Firstly, we expect coking coal prices to ease. Secondly, high-grade iron ore supply will increase much faster than supply of other iron ore grades.

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  • High-grade iron ore premium set to fall with coking coal prices PDF - 373.54 KB 6 Pages, 1 Tables, 9 Figures

Description

This Metals Insight report highlights the key issues surrounding this topic, and draws out the implications for those involved.

For industry participants and advisors who want to look at the trends, risks and issues surrounding this topic, this report gives you an expert point of view to help inform your decision making.

Our analysts are based in the markets they analyse and work with high-quality proprietary data to provide consistent and reliable insight.

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  • Executive summary
  • High-grade iron ore premium boosted by rise in coking coal prices
  • Met coal contributed more to cost increase than iron ore in 2016
  • Low-grade ore consumes more coke
  • Low-grade scenario costs more when coking coal is expensive
  • Iron ore fines premium set to fall

In this report there are 10 tables or charts, including:

  • Executive summary
  • High-grade iron ore premium boosted by rise in coking coal prices
    • Spread between high- and low-grade fines in relation to coking coal price
    • Iron ore fines 65% Fe to 62% Fe
  • Met coal contributed more to cost increase than iron ore in 2016
    • Met coal share of ironmaking costs
    • Met coal contributes more to the increased ironmaking cost (RMB/tonne)
  • Low-grade ore consumes more coke
    • Consumption rates based on three different sinter blends
    • Consumption rates for the three scenarios
  • Low-grade scenario costs more when coking coal is expensive
    • Breakdown of cost changes among the three scenarios with a high coking coal price (RMB/thm)
    • Breakdown of cost changes among the three scenarios with a low coking coal price (RMB/thm)
  • Iron ore fines premium set to fall
    • Supply of high-grade ore will increase much faster than the overall supply
    • Iron ore price outlook for iron ore fines
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