Value-in-use adjusted iron ore costs Q3 2017

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11 September 2017

Value-in-use adjusted iron ore costs Q3 2017

Report summary

Global average value-in-use (VIU) adjusted costs have gone up 14% to US$41.13 in Q3 2017. The increase has been driven by a large rise in Australian VIU adjusted costs but also more recently by a 5% increase in costs in Brazil. Of particular note has been the rise in penalties for alumina and silica content. There is potential for downward pressure on VIU adjusted costs in the last quarter of 2017. Iron ore prices are expected to soften with lower demand in China as steel producers are forced to lower output during the winter months. Lump premiums have also improved which will help lower VIU adjusted costs. However, the reductions will be modest as large discounts for low-grade ore and high penalties for silica and alumina content are likely to remain. Longer term, we expect VIU adjusted costs to rise. Most of this will be driven by factors that producers are unable to control, especially fuel prices.

Table of contents

  • Value-in-use adjusted costs continue to rise
  • High penalties for silica impact Brazilian iron ore
  • Margins improved in Q3 2017 on the back of higher iron ore prices
  • Chinese supply marginal cost

Tables and charts

This report includes 7 images and tables including:

  • CFR China cash cost by country
  • CFR China cash cost by percentile
  • 2017 CFR North China cash cost curve (62% Fe fines equivalent)
  • Seaborne iron ore cash cost by operator 2017 (CFR China, unadjusted for quality)
  • Seaborne iron ore cash costs by operator (CFR China, 62% Fe fines equivalent)
  • Cash Operating margins
  • China full cost curve 2017 (62% Fe fines equivalent)

What's included

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    Value-in-use adjusted iron ore costs Q3 2017

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