Fortescue Metals Group, Australia's third-largest iron ore producer, has maintained the discount for its flagship Super Special fines to its contract customers for loading in July, FMG's term customers said Friday.
The discount for FMG's 56.7%-Fe Super Special fines loading in July is 30%, they said, unchanged from June.
For its 58.3%-Fe Fortescue Blend fines, the discount is 23% for July-loading cargoes, down 2% from June.
These products are priced using Platts 62%-Fe IODEX assessment with an adjustment for iron content.
A term customer in central China said demand for low grade Australian fines such as Super Special and Fortescue Blend were popular among the cost-conscious end-users who want these low grade materials for blending with Carajas fines to rein in production costs.
A source at a large trading house in Beijing said: "I believe that Fortescue Blend fines are more popular and that is why the miner does not have the incentive to give the same discount as the month before."
Demand for low-grade Australian fines was also heard to be improving as it was an economical feedstock at current price levels. However, a strong uptick in prices is unlikely due to plentiful supply at Chinese ports, sources said.
"A decrease in the discount for Fortescue Blend fines is perhaps an indication that demand is supporting prices to some extent," said an international trader, adding that it would be logical for the miner to reduce the discount as a recent decline in ore prices has squeezed margins.
FMG was not available for immediate comment.
Sources said FMG typically offers contract customers two pricing periods based on S&P Global Platts 62%-Fe IODEX assessments -- a monthly average or a five-day period before and after the date on which the NOR was issued at the discharge port.
