The world’s biggest iron ore miner Brazil-based Vale announced on June 6 that it has been forced to suspend the activities of the Itabira mining complex, which accounts for around 10 percent of the total production of the company, due to the spread of Covid-19. After this, futures prices surged and iron ore spot prices have increased sharply. Today, June 8, iron ore fines with 62 percent Fe content have gained $4.5/mt or 4.3 percent from Friday to $105.3/mt CFR. Prices for Brazilian iron ore with 65 percent Fe have surged by $5.4/mt to $120.4/mt CFR on the same day.
A deal for 170,000 mt of Pilbara fines with 61 percent Fe content has been signed at $103.55/mt CFR for shipment during July 3-12. Another contract for 90,000 mt of Newman fines with 62.4 percent Fe has been concluded at $106.1/mt CFR. 80,000 mt of Jimblebar fines have been traded at the July index with a $4.75/mt discount.
Though Vale has not changed its full-year iron ore production guidance after the suspension of operations at the Itabira complex, supply worries have increased significantly in the market. Demand for iron ore in China has remained firm and, though there has been no big support from the steel demand side, customers have been in the mood to buy. Iron ore futures at Dalian Commodity Exchange have jumped by RMB 41/mt ($5.8/mt) today to RMB 783/mt ($110.6/mt).
The increase in the steel market has been much more modest today. Rebar futures have increased by RMB 13/mt ($1.8/mt) to RMB 3,616 ($511/mt).
