One nagging issue is whether GRR is receiving current rates for...

One nagging issue is whether GRR is receiving current rates for pellet prices, or are its prices delayed by 3 months? This is important because if delayed, then GRR's average pellet price in the next quarterly will still be suppressed by the earlier drop in IO prices. The short answer is: I think GRR gets near-current prices and its $128 average price in July-Sept quarter reflected prices during the worst of the downturn.

Here's more detail: GRR and Shagang previously calculated the pellet price from recent IO62 prices, which delayed the pellet price GRR received by 3 months (stated in GRR's FY11 ann rpt). In October 2012, GRR switched to the MBIO-PT index and back-dated its pricing to April (apparently no significant effect on revenue). This index provides spot pellet prices CFR in US$. GRR converts this index to FOB prices, which I presume would be about $7-$9/tonne lower because with FOB Shagang pays the shipping costs.

A review of the MBIOI-PT prices back to mid July when the index was first published online suggests that GRR's average $128 last quarter represented current pricing (i.e. represented the darkest days of IO prices). The MBIOI-PT index was about US $164 in early July, dropped to a low of $110 on 7 Sept, and two weeks later was back above $120.

GRR's quarterly will be coming out in a week or two, so we'll find out what revenue GRR actually received (and how well it has improved productivity). But its average pellet price should be a much healthier figure. The MBIOI-PT index rose from US$126 on 5 Oct to US$162 on 28 Dec -- remember to reduce these prices for US$ (3-5%) and FOB adjustment (possibly $7-$9/tonne).

FYI: the MBIOI-PT is currently (4 Jan) US$168.75. Also, the pellet index seems to lag the IO62 index by a week (i.e. should be higher this week).