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Iron Ore Price Setting Mechanisms
· Iron ore prices are quoted in terms of:
- Iron (Fe) content or “per Fe unit” – i.e. per 1% Fe.
- Dry weight – as moisture varies with ore type.
- Internationally-traded iron ore is commonly priced in US cents per dry metric ton unit (US¢/dmtu), i.e. US¢ per 1% Fe per tonne.
- To convert prices to a per tonne basis, multiply by the Fe content as in the following example:
○ 2007 Hamersley fines to Japan @ 80.43US¢/dmtu, with iron (Fe) content of 64%, i.e. 80.43US¢ per dry tonne per 1% Fe converts to: US$51.48/dry tonne (i.e. US$0.8043 × 64).
· Prices are quoted on a “free on board” (FOB) basis (i.e. loaded onto a ship).