A preference by Chinese steel mills for 62%-plus ore has seen the discounts for 58% iron widen over the past year.
FMG received over 91% of the Platts 62% iron price in the December 2016 quarter, but that slumped to just 66% for the December 2017 quarter.
The company was recently forced to lower its full-year price realisation from 70-75% to just 65%.
WoodMac's steel industry value-in-use model indicates price spreads between high and low-grade ore will remain wide into the future.
"We forecast the discount for Fortescue Metals' 56.7% Fe Super Special Fines will be sustained at 24% relative to the 62% Fe fines benchmark," it said this week.
"Similarly, we forecast the premium for Vale Carajas fines can be sustained at 20% above the 62% Fe fines...