The premium for higher quality material has expanded significantly over the last two years with the differential between 65% Fe and 58% Fe contracts of more than $50/t.
- This compares to a less than $10/t premium recorded at the start of 2016.
- 65% Fe material benchmark price currently hovers around $100/t compared to less than $50/t for 58% Fe material, according to Metal Bulletin.
- Among factors leading the spreads higher is the drive by steel mills to raise efficiency of its operations and reduce pollution.
- “In an oversupplied market, you’ll see that flight to quality… we anticipate the maintenance of those differentials over the next two to three years,” metals and mining market intelligence firm Wood Mackenzie said.