Singapore Iron Ore Week: Vale sees structural change in high-grade iron ore demand

SINGAPORE, May 24 (SMM) – The share of high-grade iron ore in the blast furnace burden mix in China has increased to 40% in 2017, from 35% in 2015, according to Rogerio Tavares Nogueira, marketing director for iron ore and coal at Vale.

“We have economic basis to say that the value differentiation [of iron ore] are here to stay,” he told delegates at the Singapore Iron Ore Forum on Thursday May 24.

Based on the Brazilian miner’s calculations, the value impact on hot metal costs amounts to $20.5/mt with the use of high grade ores.

He added that high grade ores “have a significant financial impact even in scenarios of more stringent steel margins”.

With steel margins at $50/mt, the productivity value of high-grade ores over low-grade ores is $11.7/mt. The figure amounts to $27.8/mt, with steel margins at $150/mt.

“The Chinese supply-side reform not only successfully tackled pollution but also accelerated structural changes in iron ore consumption patterns,” Nogueira said.

He added that the cost reductions and productivity benefits of using high grade ores became more evident and drove up price differentials between low and high-grade ores.

Carajas fines, one of Vale's flagship products, contains 65% Fe content on average.  

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