The rise in intra-grade price differentials in the iron ore market have led to the need for more granular pricing references for the steelmaking raw material, according to market participants.
Such differences were widely discussed during the Singapore Iron Ore Week earlier this year, when traders highlighted the need for a high-grade derivative to meet the evolving pricing requirements of the iron ore market. The needs discussed at the forum entailed demand for high-grade iron ore in China driven by steel mills' robust margins amid the Chinese government's supply-side reforms and restrictions on steelmaking operations associated with measures to cut pollution and relatively healthy downstream demand. Market participants also highlighted that the pronounced difference in the price levels realized by different brands based not just on their iron content but also the presence of impurities such as alumina and silica. "The iron ore market went through a period of commoditization nearly a decade ago and now it is under a period of stratification," a trader source told Metal Bulletin recently, referring to the opening up of inter- and intra-grade price...