Possible delays of iron ore shipments from Brazil to China due to heavy rains and some transportation disruptions have led to some rebound in futures prices in Singapore. However, overall sentiments in the market have remained negative as demand issues will be the major drivers in the near future.
Iron ore futures prices at Singapore Exchange for February contracts have increased by about 2 percent or $1.67/mt to $84.94/mt today, Wednesday, January 29. Sources said that demand in the February-March period will be much lower than expected before the holidays as it is hard to predict the consequences of the coronavirus. Some steel mills have already started to plan regular maintenance for this period as steel demand will be very low and producers do not want to create oversupply. According to one trading source, starting from next week iron ore trading will be active mainly at ports as mills will cover only urgent needs.
Most market sources agree that the demand concerns are more important than supply issues at the moment. Despite some decline in shipments expected in the first quarter, Brazilian miner Vale's total iron ore supply volume in 2020 will return to the level before the Brumadinho dam collapse in 2019, stated Bento Albuquerque, Brazil’s Minister of Mining and Energy.
The reference price for iron ore fines with 62 percent content has added $1.5/mt today to $86.5/mt CFR, which, however, is still $6.8/mt below the pre-holiday level.
