The Global Iron Ore Cost Service Part 1: Global Iron Ore Production Costs Q2 2011 Updtae

摘要

Production cost inflation slowed down slightly in 2011 Q2, with production costs for export products rising by 5.1% compared to 7.1% in 2011 Q1. Production costs were 31.9% higher than in the same period in 2010. Since 2010 Q2 iron ore pricing has mainly moved to quarterly prices based on indices of spot price for ore delivered to China in the previous months. Spot prices increased in 2011 Q1 and softened in 2011 Q2. Contract prices will transposed this trend in a lagged period, so that they were higher in 2011 Q2, but will be lower in 2011 Q3.This change in price trend will erode slightly the profit margin of producers, which will however remain enormous.