The market for iron ore product is made up of three main areas, these include:
- lumps greater than 35mm in size
- fines less than 10mm in size; and
- pellets approximately the size of a pea but concentrated to 95%+ Fe.
The Cia Minera Santa Barbara iron ore project is focused on producing iron ore fines.
BHP Billiton, CVRD and Rio Tinto are the three largest iron ore exporters in the world. CVRD are furthest from the Chinese markets in Brazil. Freight costs are less for Chilean exporters by about US$6-$8 per tonne at spot. To give an indication of prices, set out below is the latest price negotiation from CVRD.
Vale settles 2008 benchmark iron ore fines prices with Baosteel
Companhia Vale do Rio Doce (Vale), the world’s largest iron ore producer, concluded the iron ore price negotiations for 2008 with JFE Steel Corporation (JFE Steel), a Japanese steelmaker.
As an outcome of these negotiations, the iron ore prices for Southern System fines (SSF), FOB Tubarão, increased by 65% relatively to 2007. At the same time, due to its recognized superior quality, it was agreed that the price for Carajás iron ore fines (SFCJ) will have a premium of US$ 0.0619 per dry metric ton Fe unit over the 2008 price for SSF.
Therefore, the new reference prices per dry metric ton Fe unit for 2008 are US$ 1.1898 for SSF and US$ 1.2517 for SFCJ.
The magnitude of the price increase for 2008 reflects the continuity of very tight conditions still prevailing in the global iron ore market.
The iron ore price settlement with large high-quality companies and traditional customers such JFE Steel is an evidence of our commitment to the benchmark pricing system, respecting the weight of the long-term relationship and trust involved in these negotiations.
Source: BaoSteel Group Co. Press release 22/02/2008
To estimate the FOB prices for Carajas fines, at 63% Fe, the formula is 125.17 cents x 63 = US$78.86 per dry metric tonne, FOB. The maximum moisture content is 8%.
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