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.