Proposal to amend Fastmarkets’ iron ore 65% Fe Brazil-origin fines index specifications

Following an initial consultation with the market and a review of the typical data sets that have been collected over recent months, Fastmarkets is proposing changes to the specifications of the index for MB-IRO-0009 iron ore 65% Fe Brazil-origin fines, cfr Qingdao, by raising the silica base specification to 2.7% from 2.2%, as well as an inclusion of minimum and maximum values for silica and alumina levels, to ensure that it matches with the latest quality of high-grade fines commonly traded in the market.

The index tracks the spot prices of 63.5-66.0% Fe iron ore fines in the CFR China spot market, with its base specifications set to match the prevailing quality of high-grade fines.

The new specification would be as follows, with amendments in italics:

MB-IRO-0009 Iron ore 65% Fe Brazil-origin fines, cfr Qingdao, $ per tonne
Quality: Fe content base 65%, range 63.5-66%; silica base 2.7%, min 2.2%, max 3.3%; alumina base 1.4%, min 1.0%, max 1.8%; phosphorus base 0.075%; sulfur base 0.01%; moisture base 9%; granularity 90% <10.0mm, <30%<0.15mm
Quantity: Min 30,000 tonnes
Location: CFR Qingdao
Timing: Within 2-10 weeks
Unit: USD per tonne
Payment terms: Payment at sight
Publication: Daily 6:30pm Singapore time
Notes: Brazil origin only. Data history from August 2013.

This price is part of the Fastmarkets steelmaking raw materials package.

The consultation period for this proposed amendment starts from July 4 and will end on October 3. The amendment will then take place, subject to market feedback, on November 3.

To aid the transition, Fastmarkets will start from August 1 to publish a daily high-grade iron ore silica adjustment representing a 0.50% silica penalty, to give market participants a reference to derive the new IOCJ trade value.

The high-grade iron ore silica value-in-use is calculated using high-grade iron ore price inputs and their chemistries using regression analysis. The high-grade silica Value-In-Use (VIU) is determined using market-based high-grade iron ore price inputs in conjunction with their specific chemical compositions of iron ore products.

This is quantified via a regression model that is calibrated weekly to reflect current market dynamics. It isolates and values the price differential associated with variations in silica content, calculating the incremental values assigned to a 1% reduction in silica content by the market.

To provide feedback on this index, or if you would like to provide price information by becoming a data submitter to this index, please contact Norman Fong/Alice Li/Zheng Shuyi/Paul Lim by email at: pricing@fastmarkets.com. Please add the subject heading “FAO: Norman/Alice/Shuyi/Paul, re: 65% Fe iron ore index.”

Feedback will be reviewed regularly during the consultation period.

Please indicate if comments are confidential. Fastmarkets will consider all comments received and will make comments not marked as confidential available upon request.

To see all Fastmarkets’ pricing methodology and specification documents, go to https://www.fastmarkets.com/about-us/methodology.