Iron ore futures prices surged on Monday morning, as supply concerns grew after top iron ore miner Vale SA suspended the activities of the Itabira mining complex, comprising by the Conceição, Cauê and Periquito mines, in Brazil.
The most active iron ore contract on the Dalian Commodity Exchange (DCE) jumped more than 7% to its highest since August 2019 at 798 yuan/mt shortly after the opening bell on Monday. The futures on the Singapore Exchange (SGX) also notched a 10-month peak of $103/mt.
The shutdown by Vale was in compliance with a decision issued by the Regional Labour to “protect the health of workers” in the midst of the Covid-19 pandemic, according to the statement released by the miner on Saturday.
Vale, however, is sticking with its iron ore fines production guidance of 310-330 million mt for 2020, given the expected monthly production of 2.7 million from the Itabira Complex for the coming months and the provisioning of up to 15 million mt of losses associated with the pandemic.
The shutdown order may create “a temporary shortage of pellets for the domestic market”, Vale added, as the complex provides pellet feed for the pelletizers of the Tubarão Complex.
The recent rally in iron ore prices was driven by concerns over supply. SMM data showed that inventories of seaborne iron ore at Chinese ports fell in seven weeks of the past eight and currently stands at three-year lows.
China’s imports of iron ore and concentrates shrank more than 9% from April to 87.03 million mt in May, according to data from the country’s General Administration of Customs released on Sunday.
Source: SMM News
https://www.hellenicshippingnews.com/dalian-iron-ore-surged-7-after-vale-shut-some-mines-in-brazil/
