Fortescue: Price spread between iron ore grades likely to narrow

Author: Paul Ploumis21 Aug 2014 Last updated at 03:28:58 GMT

 

CANBERRA (Scrap Monster): The Australian iron ore mining major-Fortescue Metals Group said Wednesday that it expects the price spread between the 58% Fe and 62% Fe grades to narrow further in the year ahead. The company stated that they are seeing it narrow already. Nev power, CEO, Fortescue expressed this view while announcing the earnings for fiscal 2013-’14 during a conference call.

 

"It's currently around 83% and I think it will continue to narrow because mills like the high value-in-use component of our products," he said, in response to a question. "The market is starting to re-balance, port stocks are coming down and mills are restocking."

 

According to Power, the Chinese pollution control mechanisms may not necessarily mean that mills will favor only higher grade ores. The company mainly supplies iron ore to large, sophisticated mills that follow dust control standards. The government regulations are likely to affect older mills. Hence the effect will be minimal for the company, Power added.

 

Meanwhile, boosted shipments from Pilbara mines helped the company to raise its net profit by 56% to $2.73 billion during the fiscal, despite low prices of iron ore. The iron ore shipments by the company during 2013-’14 totaled 124.2 million mt, 54% higher from the previous year.