What is Fe 62%?
The reference iron content for seaborne iron ore fines and the basis of the main published index. Cargoes above or below the reference settle against published premiums and discounts rather than a flat renegotiation.
Key points
- The reference grade for seaborne fines, priced CFR China.
- Other grades settle against the index, not by renegotiation.
- Sold dry, shipped wet — verify the difference at discharge.
At a glance
| Reference content | 62% Fe, dry basis |
|---|---|
| Pricing basis | CFR China |
| Higher grades | Premium per unit of Fe; widens with steel margins |
| Penalised impurities | Silica, alumina, phosphorus, sulphur |
| Weight basis | Dry metric tonne |
The benchmark
Fe 62% describes iron ore fines containing 62% iron by dry weight, and is the reference specification for the principal seaborne iron ore indices quoted CFR China. When a market report says iron ore is at a given dollar figure, it almost always means 62% Fe fines delivered to China.
It became the benchmark because it approximates the typical grade of Australian and Brazilian fines that dominate seaborne supply.
How other grades price against it
Cargoes are not renegotiated from scratch when the grade differs. They settle against the index with published premiums and discounts per unit of iron above or below 62%, so a 65% Fe cargo earns a premium and a 58% cargo a discount.
The adjustments are not always linear. When steel margins are strong, mills pay disproportionately for high grade because it raises blast furnace productivity; when margins compress, the premium narrows.
Impurities and moisture
Iron content alone does not price a cargo. Silica, alumina, phosphorus and sulphur all carry penalties, and alumina in particular matters to sinter performance.
Moisture is the other half. Iron ore is sold on a dry metric tonne basis but shipped wet, so the invoice quantity and the bill of lading quantity are different numbers — and the difference is the buyer’s to verify at discharge.
Frequently asked questions
- Why is 62% the iron ore benchmark?
- Because it approximates the typical grade of the Australian and Brazilian fines that dominate seaborne supply, making it the most liquid reference for index pricing CFR China.
- How are higher and lower grades priced?
- Against the index using published premiums and discounts per unit of Fe. The adjustment is not fixed — high-grade premiums widen when steel margins are strong and narrow when they are not.
- What impurities are penalised in iron ore?
- Chiefly silica, alumina, phosphorus and sulphur. Alumina matters particularly for sinter performance, and each carries a contractual penalty scale above threshold levels.
Related terms
Ore of high enough grade to be shipped and used with only crushing and screening — no beneficiation. Cheaper to bring to market than magnetite, which must be concentrated first.
The analytical determination of metal content in an ore, concentrate or refined product. Buyer and seller assays commonly differ slightly; contracts usually set a tolerance and appoint an umpire laboratory to settle disputes beyond it.
The largest independent inspection, testing and certification company in the world, founded in 1878 and headquartered in Geneva. In commodity trade its certificates of quality and weight are what a buyer, a bank and an insurer all rely on instead of taking the seller’s word.
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