COSTS AND PRICES OF IRON ORE

摘要

The recent history of iron ore prices has been characterised by high price volatility. Compared to 2006, in 2007, iron ore prices increased by 9.5% for lump and fines and by 5.3% for pellets at a time when the costs of production for iron ore were falling because of slightly lower oil prices. Production costs escalated rapidly up to the third quarter of 2007, moved slightly higher in Q4 2007 and increased significantly through the first three quarters of 2008 before a drop of 15-20% in 2008 Q4. In Q1 2009 production costs were stable. Profit margins on contract sales fell during 2007, as costs rose while contract prices remained unchanged through the year. Contract prices for 2008 at least compensated for the percentage increase in costs during 2007 and moved prices far above the costs of the marginal producers, except for pellets. As costs fell later in 2008 and into 2009 the profit margin on benchmark prices remained extremely high for all products.