FOCUS: The resilience of the 65/62% Fe price spread

For two consecutive years now, the first quarter has been marked by watershed events as for the iron ore market.

Last year, it marked the beginning of a severe supply disruption from Brazil. This year, the Covid-19 pandemic took center stage.
Put simply, Covid-19 has slowed down the recovery of downstream demand in China - the world’s biggest steel-producing country - that typically takes place after the Chinese New Year break
Logistical and pressures on the demand side have resulted in a build-up of steel inventories, souring the outlook for downstream prices.
But despite the poor sentiment, the price spread between mid-grade iron ore and high-grade materials has persisted at around $15 per tonne, even though mills are known to switch to lower-grade iron ore to lower input costs when their margins come under pressure.
Fastmarkets looks at the key factors driving the resilience of this inter-grade spread.

Constrained supply

Iron ore inventories at Chinese ports rose slightly before the Chinese New Year holiday that started on January 24 before experiencing...

Published

Deepali Sharma

Zihao Yu

April 20, 2020

06:40 GMT

Singapore