Insight
High-grade iron ore premium set to fall with coking coal prices
*Please note that this report only includes an Excel data file if this is indicated in "What's included" below
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.
Table of contents
- 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
Tables and charts
This report includes the following images and tables:
-
Spread between high- and low-grade fines in relation to coking coal priceIron ore fines 65% Fe to 62% FeMet coal share of ironmaking costs
-
Met coal contributes more to the increased ironmaking cost (RMB/tonne)Consumption rates based on three different sinter blendsConsumption rates for the three scenariosBreakdown 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)Supply of high-grade ore will increase much faster than the overall supplyIron ore price outlook for iron ore fines
What's included
This report contains:
Other reports you may be interested in
Insight
Perspectives - Metals and Mining - December 2025
A cross-commodity outlook
$1,050
Country Report
Global iron ore supply summary 2025
Iron ore margins remain strong in 2025. Avg cost: US$59.8/t. Capex rises to US$17.2B, driven by quality upgrades and emissions goals.
$6,750
Country Report
Indonesia coal supply summary
Swing supplier - Indonesia coal exports expanded by 54 Mt in 2023
$6,750
