Cotton & Western Mining Inc (fka CWRN)

[surebob]

wrong and right

Contracted price is sold as cents per DMTU generally on a FOB basis with the big three. Dry means a certain percent of moisture acceptable to both parties or the standard...6-7%, if I remember. Anything higher and there will be deductions.

http://www.steelonthenet.com/commodity_prices.html
179 cents x Fe% plus shipping.
The big steel companies contract volume, but now, prices change every quarter instead of every year.

spot price is the spot price. It is higher than contracted because you are not obligated to buy any more than one.
Taking your scenario of a CFR basis, 180 spot x .62= 111 which is lower than contracted price on FOB basis. IS Bob selling on FOB or CFR basis? Who's paying for the ship?
FOB always gets a discount because the trader or buyer ( end user ) gets to take more risk of getting the ore to China and also there is the risk of seller not getting the ore to the port for loading. Time and risk cost money.