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...