Fortescue narrows discounts for iron ore in January

Australian iron ore producer Fortescue Metals has narrowed discounts on its major products, as demand for low-grade ores has picked up in the Chinese market.

SSF fines cargoes will be sold at a 37pc discount to the January 62pc reference index compared with a 40pc discount in December and a 42pc discount in November, said Chinese market participants. The discount for blended fines has been set at 28pc compared with 29pc in December, while the discount for King's fines narrowed to 8pc from 12.5pc.

Mills have been more interested in buying low-grade ores since last month to keep a check on costs, as profit margins have shrunk to the lowest levels this year. Mills are using more SSF fines, blended fines, lower-priced medium-grade mainstream fines and non-mainstream ores, such as Indian fines.

Buying of SSF fines and Fortescue blended fines has been active in China's portside markets.

The Argus-assessed portside SSF fines free-on-truck Qingdao narrowed its average discount to the Argus PCX 62pc portside fines to 36pc in December from 38pc in November.