Iron ore

The primary indicator of value is the Total Iron (Fe) content, typically categorized as High-grade (65% Fe and above), Medium-grade (62-65% Fe), or Low-grade (below 62% Fe). Beyond Fe content, you must strictly monitor impurities: Silica (SiO2) and Alumina (Al2O3) should ideally be kept low to reduce slag volume in blast furnaces, while Phosphorus (P) and Sulfur (S) must be minimized to prevent brittleness and environmental non-compliance in steel production.

Iron ore is generally traded in three forms: Fines, Lumps, and Pellets. Fines (usually <10mm) require sintering before use, which adds a processing step. Lumps can be charged directly into a blast furnace, often commanding a price premium due to higher permeability. Pellets are preferred for their uniform size and high cold crushing strength, making them ideal for Direct Reduced Iron (DRI) production and reducing the carbon footprint of steelmaking.

Buyers should demand a Certificate of Analysis (COA) issued by reputable third-party inspection agencies like SGS, Intertek, or CCIC. This certificate must verify the chemical composition and moisture content (TML - Transportable Moisture Limit). Additionally, ensure the supplier complies with the IMSBC Code (International Maritime Solid Bulk Cargoes Code) to prevent liquefaction risks during sea transit.

Iron ore is priced on a Dry Metric Ton (DMT) basis, but shipped as Wet Metric Tons (WMT). High moisture content (typically above 8-10%) not only increases shipping costs for 'dead weight' but can also lead to cargo liquefaction, a major safety hazard. Always negotiate a price adjustment clause based on the final moisture determination at the port of discharge.

The most significant risks include price volatility between the contract date and delivery, and quality discrepancies where the delivered Fe grade is lower than the sample. To mitigate these, use hedging instruments or index-linked pricing (e.g., Platts or 62% Fe Fines Index) and mandate independent inspection at both the loading and discharge ports.

For bulk commodities like iron ore, the safest payment method is an Irrevocable, Confirmed Letter of Credit (L/C) at sight. This ensures payment is only released when the seller presents valid shipping documents and a clean inspection report. Avoid large upfront T/T (Telegraphic Transfer) payments to unverified suppliers.

Focus on long-term off-take agreements rather than spot purchases to secure stable supply and better pricing. Negotiate penalties and bonuses (P&B) clauses: for every 1% the Fe content falls below the target, a specific dollar amount is deducted from the price, and conversely, a premium is paid for higher purity.

Iron ore is typically shipped via Capesize or Panamax vessels to optimize freight costs. Ensure the destination port has the draft depth and unloading infrastructure (conveyor systems/stacker-reclaimers) to handle bulk carriers. For sourcing via Made-in-China.com, prioritize suppliers who offer FOB (Free On Board) terms if you have a preferred logistics partner, or CFR (Cost and Freight) if you want the supplier to manage the vessel chartering.