Iron ore price, page-2233

Yes, diversify into anything will do, for SP to kick up another level, I mean double digit +, FMG would need to do more than just 58% IO. FMG now expect its realised price for current FY to be 75-80%, down from 85-90% previous years. The gap between 58% and 62% have widen and stayed pretty wide for some 6 months now.

Historical prices:
- 2015 averages:
- Platts 62% US$56.22
- Platts 65% US$62.31
- Platts 58% US$47.40 (15.7% discount to 62% and 23.9% discount to 65%)
- FMG Realised Price US$47.60 (15.3% discount to 62%, 24% discount to 65%)
- 2016 averages:
- Platts 62% US$58.44
- Platts 65% US$64.89
- Platts 58% US$44.73 (23.45% discount to 62% and 31% discount to 65%)
- FMG Realised Price US$51.72 (11.5% discount to 62%, 20.3% discount to 65%)
- 2017 averages (first 6 months):
- Platts 62% US$74.10
- Platts 65% US$86.84
- Platts 58% US$44.77 (39.5% discount to 62% and 48.4% discount to 65%)
- FMG Realised Price US$50.59 (31.7% discount to 62%, 41.8% discount to 65%)

In 2015 and 2016, FMG's realised price was very close to the higher grade benchmarks, but last 6 months it hit a wall and discount widened dramatically. FMG's realised price actually average around US$50 for the whole year for last 2.5 years, even when 62% IOP went from US$40-US$90. The fact that FMG admitted that next year's guidance probably is 75-80%, not the usual 85-90%. They are probably conceded that the discount is going to stay for another 12 months minimum, maybe even longer.

There is no point getting into pellets or concentrated IO business, that will just destroy the current products they have now. There will always be a market for FMG's current IOs, I have no doubt about that, FMG can just do nothing and money will roll in year after year, selling their IO around US$50/T.

But to get SP to double digits, diversify into other metals or sectors is really the only way going forward, IMO of course.

Unitl then, we will have a BBQ at my place, hehe.

DYOR.

Frank.