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Fortescue to loose from China's shift towards high grade iron ore

Mining News - Published on Thu, 07 Dec 2017

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Radio Australia reported that Australia's second biggest iron ore miner Rio Tinto believes it will be a big winner from China's increasing demand for high grade iron ore, but it could spell trouble for the likes of Fortescue Metals. Beijing's crackdown on inefficient and polluting mills, and a restructuring of the steel industry, has led to a significant shift in iron ore demand.

Rio Tinto's iron ore boss Mr Chris Salisbury told ABC's “The Business that this trend was showing up in a growing price gap between high and lower grade ore. We've seen the discount grow from 30 % in the first three quarters to over 40 %."

Mr Salisbury told the program that "That's a very interesting question, because we've seen the stockpiles of low grade ore at the port just increasing and it's almost like you can't give it away. "So it is a real challenge if you're in that particular market sector.”

Mr Salisbury added that "We have the flagship product in the market today; our Pilbara blend product is flagship product for China, it attracts a premium over and above the 62 % iron index, which is the key indicator."

Some analysts believe this could be temporary, relating to reduced Chinese demand leading into winter

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Posted By : Rabi Wangkhem on Thu, 07 Dec 2017
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