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Value-in-use adjusted iron ore costs Q2 2018

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26 June 2018

Value-in-use adjusted iron ore costs Q2 2018

Report summary

The average value-in-use adjusted iron ore cost is US$41.2/tonne (62% Fe fines basis, CFR China), 2.5% higher than a year ago. Adjustments for impurities such as alumina, silica and phosphorus have moved substantially which has affected VIU adjusted costs. The impurity adjustments have moved because of an increase in alumina content relative to silica content in the seaborne market. Phosphorus levels have also increased owing to the ramp up of BHP's Jimblebar mine. Steel mills are looking to maximise output because of high steel prices, and are penalising impurities that negatively affect productivity. We expect steel mill margins to remain positive and seaborne supply to continue shifting to more alumina and phosphorus content over the long term. As a result, adjustments for impurities will continue to be a major driver of VIU adjustments.

Table of contents

  • Executive summary
  • Alumina and phoswill remain important drivers of VIU adjustments
  • Narrow margins for Chinese mines
  • Value-in-use assumptions

Tables and charts

This report includes 8 images and tables including:

  • 2018 Value-in-use adjusted cost curve (CFR China, 62% FE fines equivalent)
  • VIU adjusted cash cost by country (CFR China)
  • VIU adjusted cash cost by percentile (CFR China)
  • Impurity adjustments
  • Seaborne iron ore cash costs by operator (CFR China, unadjusted for quality)
  • Seaborne iron ore cash costs by operator (CFR China, VIU adjusted)
  • 2018 China value-in-use adjusted cost curve (62% Fe fines equivalent)

What's included

This report contains:

  • Document

    China_delivered_VIU_adjusted_costs_Q2 2018.xls

    XLS 1.63 MB

  • Document

    Value-in-use adjusted iron ore costs Q2 2018

    ZIP 656.54 KB

  • Document

    Value-in-use adjusted iron ore costs Q2 2018

    ZIP 656.54 KB

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