It’s a point I’ve been making for some time, that the junior miners have lower levels of high grade material, and the lower grades is where much of the glut is in the market. This is exacerbated by China’s anti-pollution push given lower grade material must go through the very dirty sintering process before being fed into furnaces. That has meant that not only is benchmark 62% iron ore falling but the lower grades are falling faster still. The gap is now 15% and higher between 62% and 58% purity.
UBS has adjusted its iron ore break even chart to reflect this reality today (at an assumed discount of 12.5%) and result is an unhappy picture across the junior cost curve right up to FMG:
You can see why $80 iron ore is calamitous for the Pilbara.