Commodity Trading — 04
Iron Ore
Seaborne iron ore cargoes structured end to end — grade and freight assessed together, inspection regime written into the contract, payment released against documents that match the goods.
How does Wisemann Capital trade iron ore?
Wisemann Capital originates and executes seaborne iron ore cargoes in fines, lump and pellets. We agree specification and tolerances, price against the 62% Fe index with grade adjustments, appoint independent inspection at load port, arrange the letter of credit so its documentary conditions match the sale contract, and manage nomination and laytime through to discharge.
How a cargo runs
Six stages. Most iron ore disputes originate in the first two and only surface at the sixth.
Requirement and origination
We start from your furnace requirement and discharge constraints, not from what is available. Grade tolerance, acceptable impurity ceilings, berth draft and discharge rate determine which origins can actually serve you — and rule out cargoes that would price well and perform badly.
Specification and tolerances
Fe content, silica, alumina, phosphorus, sulphur and sizing are fixed with explicit tolerance bands, together with the rejection threshold. A contract that names a target grade without stating what happens at the margin is where most quality claims begin.
Pricing and quotational period
Cargoes price against the 62% Fe index with premiums or discounts for grade and impurities. The quotational period — which pricing days apply — is negotiated, not assumed, and it is often worth more than the headline differential.
Contract and payment structure
Incoterm, payment instrument and documentary conditions are drafted together. The letter of credit is written so that the documents it calls for are exactly the documents the inspection regime will produce, which is the single most effective way to avoid a discrepant presentation.
Nomination, laycan and loading
Vessel nomination, laycan window, load rate and demurrage terms are agreed before fixture. Independent surveyors draw samples and determine weight and moisture at load port, and their certificates govern settlement.
Discharge and settlement
Final invoicing follows certified dry weight and assay. Where a discharge-port analysis is contractually provided for, the umpire mechanism for resolving a split result is already written down rather than negotiated under pressure.
Contract specification
Typical parameters. Final specification and tolerances are agreed per contract and certified at load port.
- Forms traded
- Fines, lump, pellets, concentrate
- Iron content (Fe)
- 58% – 65%; 62% Fe the pricing benchmark
- Impurity ceilings
- SiO₂, Al₂O₃, phosphorus and sulphur capped with penalty scales
- Moisture
- Determined at load port; deducted to dry metric tonnes
- Transportable moisture limit
- Certified before loading — a safety condition, not a quality one
- Pricing basis
- 62% Fe index plus grade and impurity adjustments
- Inspection
- SGS, Intertek or Bureau Veritas at load port
- Payment
- Letter of credit against shipping and inspection documents
- Incoterms
- FOB, CFR, CIFindicative
- Typical parcel
- Supramax to Capesizeindicative
What we manage on your behalf
The commercial work in an iron ore trade is mostly risk allocation. These are the exposures we take a position on.
Grade against freight
A higher-Fe cargo on worse freight can land more expensively per tonne of contained iron than a lower-grade alternative. We run both legs together before recommending an origin — assessing them separately is how buyers overpay for grade they did not need.
Moisture and settled weight
Ore is priced dry and shipped wet. Free moisture is measured at load port and deducted from invoiced weight, so the sampling protocol is a commercial term. Cargo above its transportable moisture limit is a safety matter that can stop a loading outright.
Documentary conformity
Payment fails on discrepant documents far more often than on defective cargo. We draft the credit against the inspection regime actually in the contract, so the certificates produced are the certificates the bank is expecting.
Counterparty performance
Seller performance risk is assessed before contracting, and structured against — through the payment instrument, the inspection regime and, where warranted, a performance bond.
Laytime and demurrage
Load and discharge rates, laycan and demurrage are agreed at fixture. Berth congestion is priced in advance rather than argued about after the fact.
What moves the market
Seaborne supply is concentrated in Australia and Brazil, and Chinese steel demand is the dominant call on it. That concentration makes landed cost unusually sensitive to two things a buyer does not control: Chinese mill utilisation, and Capesize freight rates.
The practical consequence for a buyer is that timing the index matters less than structuring around it. Choosing the quotational period, setting the impurity penalty scale and fixing freight are all decisions with more reliable value than a directional view on price — and they are where we concentrate.
Common questions
Frequently asked
Does Wisemann Capital sell iron ore as principal or arrange it as agent?
Both, depending on the transaction. Principal trades mean we contract with buyer and seller directly and carry performance risk; agency mandates mean we structure and manage the trade on your behalf. Which applies is settled before any contract is drafted, because it determines who carries credit and performance exposure.
How is an iron ore cargo priced?
Against a published index — commonly the 62% Fe benchmark — adjusted for actual grade and impurity content, over an agreed quotational period. The index is public. What is negotiated is the differential, the penalty scales and which pricing days apply, and those together often matter more than the headline number.
What happens if the cargo does not meet specification on arrival?
The contract governs. Within tolerance, price adjusts on the agreed penalty scale. Outside the rejection threshold, the buyer has rejection rights. Where load and discharge assays disagree, an umpire laboratory named in the contract resolves it — which is why that clause is negotiated at the outset rather than when a claim arises.
Who appoints and pays for inspection?
The contract names the surveyor and allocates cost, usually shared. What matters more is that the same inspection regime is written into the letter of credit, so the certificates produced at load port are the exact documents the bank requires for payment.
Can payment terms be arranged alongside the cargo?
Yes, through our Trade Instruments Facilitation team — which is the reason trading and trade solutions sit in one firm. The letter of credit is drafted against the sale contract rather than after it, so the documentary conditions match the inspection and delivery terms. A credit written in isolation from the trade is the most common cause of payment delay in physical iron ore.
Related
- CopperPhysical copper trading in Grade A cathode, wire rod and concentrate — premium negotiation, QP selection, brand acceptance and LME-referenced settlement.
- Crude OilPhysical crude oil trading — grade selection on API and sulphur, benchmark-plus-differential pricing, storage at Fujairah and independent inspection at load and discharge.
- Trade Instruments FacilitationFacilitation of letters of credit, standby letters of credit, bank guarantees, performance bonds and advance payment guarantees — structuring, documentation and presentation against the underlying trade.
Discuss an iron ore cargo
Tell us your grade tolerance, tonnage and discharge port, and we will come back with workable origins and an indicative landed cost.
Start an enquiry