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Fortescue to sell lower-grade iron ore to Chinese steelmakers at 29% discount

To maintain market share, Fortescue Metals Group Ltd. has been forced to sell its iron ore product with 58.3% content at a higher discount of 29% for December deliveries, compared to 25.5% in November and 8.5% in January, The Australian Financial Review reported Nov. 27, citing traders.

The discount on the company's lowest-grade 56.7% ore, meanwhile, was unchanged at 40% but increased from 16% at the start of the year.

The price cuts for Fortescue's ore with a slightly higher grade are being implemented on the heels of Chinese pollution-control measures that caused steel mills to cut back on production during the winter months.

The measures have pushed Chinese steel mills to favor using higher-grade iron ore as it requires less coking coal in the steelmaking process, therefore lowering emissions and maximizing steel output from limited capacity.