The slump in the iron ore price is being exacerbated for producers of lower grade iron, with Atlas Iron confirming that it is suffering a wider discount to the benchmark price than usual.
Atlas typically sells ores containing 58 per cent iron, slightly below the benchmark which is ore containing 62 per cent iron.
The lower grade means Atlas is paid a discount to the benchmark price of the day for its iron ore, but Atlas boss Ken Brinsden said that discount was widening at the moment, as increased exports gave buyers a choice of product.
"Increasing supply is placing further downward pressure on 58% (iron) products, with significantly increased discounts to the 62% index being experienced for that product while the market adjusts to accomodate the increased presence of this type of product," he said during a presentation in Sydney today.
Sceptics have previously argued that lower grade iron producers will face a tougher future, as Chinese steel mills seek to improve their environmental performance, and therefore favour higher grade iron ore.
The benchmark iron ore price rose slightly overnight from $US91.80 to $US92.10, but is still more than 30 per cent lower than at the start of 2014, and many pundits expect it to fall further in coming weeks. But on the positive side, Atlas is the second iron ore miner over the past 24 hours to suggest that the indian market is opening up for Australian producers.
Atlas said today that the reduced price levels were making Australian iron ore competitive in India, with Atlas completing its first sale into the subcontinent during May.
That comes after fellow iron ore miner Grange Resources said on Monday that Indian buyers had shown a lot of interest in Australian iron ore in recent weeks on the back of bans imposed by the Indian government on some Indian iron mines
"We are seeing that market open up again, and we had a lot of interest in the last few weeks from Indian buyers,'' said Grange chief executive Wayne Bould.
Atlas said it would continue to assess the opportunity to sell into other new markets, including Europe and parts of Asia beyond China.
While pricing remains tough for Atlas, the company is doing well on the things it can control; production rates.
The company shipped its highest monthly total ever during May, when 1.25 million tonnes were exported.
The company's guidance is to export between 10.2 million tonnes and 10.7 million tonnes this financial year, and Atlas said today it was targeting the higher end of that guidance.
Atlas shares were down 0.5 cents a short time ago to 69 cents.
Grange shares were up 0.5 cents to 17 cents a short time ago.
Shares in Fortescue, BHP Billiton and Rio Tinto were all trending higher this morning.