Value-in-use adjusted iron ore costs Q1 2022 Report

Insight 27 April 2022

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*Please note that this report only includes an Excel data file if this is indicated in "What's included" below

Report summary

The average global value-in-use iron ore cost for Q1 2022 is US$46/dry tonne (62% Fe fines basis, CFR China). This is down 12% compared to last quarter but up 13% compared to the same period last year. Although higher bulk freight rates have persisted into 2022 and continue to have an impact on CFR costs, weaker exchange rates have offset some cost increases which has brought down the average VIU cost. Cash margins declined to 53% last quarter due to lower iron ore prices and higher costs but Q1 2022 has seen a jump up to 67% with CFR benchmark 62% Fe fines price now expected to average US$140/dry tonne in 2022. Prices are expected to gradually drift lower this year and we are also expecting costs to rise and this should have a negative impact on margins going forward.

Executive Summary
- Lump and Pellet premiums remain high
- Fines and Impurities
- Cash margins reverse a downward trend
- China costs and supply
Value-in-use assumptions

Tables and charts

This report includes the following images and tables:

2022 Value-in-use adjusted iron ore cost curve (CFR China, 62% Fe fines equivalent)
VIU adjusted cost by country (CFR China)
VIU adjusted cost by percentile (CFR China)

Seaborne iron ore cash costs by operator 2021 (CFR China, 62% Fe fines unadjusted)
Seaborne iron ore cash costs by operator 2021 (CFR China, 62% Fe fines equivalent)
2022 China value-in-use adjusted cost curve (62% Fe fines equivalent)