Ann: Quarterly Activities Report, page-90

For anyone wondering iron ore swaps cash settle at the average of the daily index price in the month of settlement - hence the hedge can't be perfect. Should a cargo be sold on a day that the price is below the average then there will still be a shortfall. Conversely if a cargo is sold on a day that is above the average then there is a benefit.

Question I wonder is would there have been any benefit to having shipped lower grade material in a time of low prices that then may have attracted a price discount whilst reserving higher grade material for higher prices in the future?

I haven't seen what premiums for an extra 1%Fe have done over the last little while however I recall that back when IO was falling off its highs in 2011/2012 Fe premiums were very low as low grade material was bid up. The rational was that blast furnaces didn't want to turn-off at the time and wanted to keep running while reducing their steel output and costs. (Chinese steel mills were even purchasing cargos around 40% Fe from India for that reason.) Obviously the opposite is true when prices are high and a mill wants to increase output and so higher grade material fetches a premium.

Does anyone know/ have some thoughts?

Agree some colour on the grade from management on the report would have been helpful.