... actually vindicates UMC's view on the relative value of high...

... actually vindicates UMC's view on the relative value of high grade ore. An extract from a broker report today:

"Our market information also suggests that a substantial portion of the stockpiled material is either lower grade/higher impurity material that has been bought in by
traders that is not wanted by the mills at any price."

...and an interesting view on the benefits of index vs contract pricing for Australian producers...

"We have long held the view that iron ore’s current annual contract price benchmark system is a relatively in-effective method of determining the seaborne market’s
value of iron ore. This is because Asian steel mills keep all the “relative value upside” generated from the closer proximity of Australian production, not sharing
the incremental freight differential with Au producers. The average time for a laden voyage of iron ore from Brazil to China is 44 days, vs 18 days for Australia / China with an average laycan time of 20-35 days. On this basis, it is obvious Australian iron ore producers sell their ore too cheaply vs both spot Indian and Brazilian ore, despite the fact the differential vs spot has closed markedly given the dramatic spot price pull-back. In our view, an index should result in the creation of a “market
clearing price” which reflects market drivers of both buyers and sellers no matter where the origin. In addition, we believe an iron ore index will result in increased market transparency, will compensate producers for better quality ore & improve liquidity for the benefit of both buyers & sellers."

Cheers
UIO