Ex-Australia iron ore prices make a slight upward start to current week

Monday, 01 April 2019 18:07:13 (GMT+3)   |   Istanbul
       

Prices of ex-Australia iron ore with 62 percent Fe content for delivery to China’s Qingdao port softened as of the beginning of last week to $83.94-85.04/mt CFR China. However, with Vale reducing its annual sales target and also given the rises in iron ore futures contract prices, prices of ex-Australia iron ore with 62 percent Fe content for delivery to China’s Qingdao port increased slightly on Friday, March 29, and closed the week at $86.62/mt CFR.

Meanwhile, the prices in question have increased by $0.47/mt on the first work day of the current week to $86.54-87.64/mt CFR China. On the other hand, export offers for high quality iron ore with 65 percent Fe content from Brazil have remained stable today, April 1, starting the current week at $98.81-99.81/mt CFR China.

After Vale’s most recent announcement, it is understood that its annual global iron ore production will decline by around 92.8 million mt since it has been forced to close 13 of its tailings dam in Brazil. Last week, Vale stated that it may open its Brucutu mine which represents eight percent of its annual iron ore production, raising expectations of a slight easing of the tightness of iron ore supply. However, a new court decision has signaled that the reopening of Brucutu will take longer than expected. As a result, demand for Indian high grade iron ore fines (with Fe content of 63.5 percent and higher) has increased slightly with India’s export offers moving up by around $2.10/mt CFR on Friday last week.

Market sources state that a tropical storm last week negatively affected Australia’s iron ore shipments, and so Rio Tinto has declared force majeure on some contracts. Meanwhile, Vale has announced that it estimates its iron ore sales volume in 2019 will range between 307 million mt and 332 million mt. The company’s first sales estimate for the current year was 382 million mt. This development has added to the uncertainties regarding global iron ore production.

Meanwhile, Australian miner Fortescue underlines that it will be hard to fully compensate for the shortfall in supply as the company cannot rapidly accelerate its mining activities, but at the same time it added that Australian mines have increased their medium and long-term production targets to meet with global demand. In the short term, it is expected that shortages may continue to be seen in the global iron ore market, while iron ore prices may maintain their fluctuating trend.


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