Value-in-use adjusted iron ore costs Q1 2021 Report

Insight 04 March 2021

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Report summary

The average value-in-use adjusted iron ore cost for Q1 2021 is 10% compared with last quarter. Australian producers have reported higher costs in recent reports due to a stronger Australian dollar and additional costs associated with managing COVID-19. However, global cash operating margins have reached 75%, driven by soaring iron ore prices. High margins are being supported by China's growing demand for steel and a tight seaborne market. We still think that prices will ease in the second half of the year but if Chinese demand continues to surprise on the upside, iron ore producers could be in for another hugely profitable year.

Executive Summary
Lump and pellet premiums are up - but for how long?
Impurities
Have high grade premiums run their course?
Profit margins are stronger than ever
Value-in-use assumptions

Tables and charts

This report includes 7 images and tables including:

2021 Value-in-use adjusted iron ore cost curve (CFR China, 62% Fe fines equivalent)
Seaborne iron ore cash costs by operator 2021 (CFR China, 62% Fe fines unadjusted)
Seaborne iron ore cash costs by operator (CFR China, 62% Fe fines equivalent)