For the last three months, around 10% of seaborne iron ore fines in our dataset have been selling at below breakeven cost. With the four major producers accounting for 89% of seaborne fines supply in our dataset, all other suppliers of iron ore fines are achieving only slender margins or operating at a loss. The recent rally in iron ore prices to US$46/dmt has provided relief for several iron ore producers. This is particularly true for South African mines that have breakeven costs between US$36/dmt to US$37/dmt. However, the rise in prices has not been sufficient for Australian juniors to be cash positive. We also have doubts about the sustainability of the recent rally in iron ore prices. We expect Chinese iron ore demand to contract further in 2016, and with production costs continuing to fall, there is more downside than upside to prices in the near term.