Fortescue Metals Group has reportedly further discounted its iron ore for February, despite beliefs the rough stretch for lower grade miners may have passed.
FMG’s highest grade iron ore will trade at a discount of 33% off the spot price in February, according to a report in the Australian Financial Review.
The product, which averages 58.3% iron content compared to the 62% grade used for the spot price, traded at a 29% discount in January and December, and a 25.5% discount in November.
The February discount continues a rough stretch for lower-grade producers, who just a year ago were commonly accepting a discount of just 8.5%.
Opinions are split on whether conditions will improve for lower grade iron ore miners, with Fortescue boss Nev Power saying he expected the December quarter to be “about the low point,” but others saying pollution control measures in China aren’t likely to ease anytime soon.
According to Steelhome analyst Du Hongfeng, who reportedly spoke to AFR, Fortescue’s large February discount may not truly represent market conditions, however. “Fortescue are trying to win bigger market share through a lower discount,” Du was quoted as saying this week.