USB says so:
A Green China is leading to a structural change to iron ore price discounts
The environmental agenda in China, on the back of continued domestic growth, has had a material impact on the steel making industry in recent years. This is driving high productivity of steel mills, which will see margins remain relatively higher, and thus drive mills towards higher grade iron ore. The discounts today are the highest seen in the last 6 years. In the case of FMG, the discount to the Platts 62 index was 23% in MQ 15, dropped back to 6% by MQ 16, yet since then the discount has been steadily increasing with last reported (MQ 18) at 38%. It makes sense that FMG is starting to explore alternative product strategies that may enable it to receive better margins in this new environment. The announcement that Eliwana has been approved by the FMG Board for development is a key enabler to delivering this change.
