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Kallanish Kallanish

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April, 21st 2019

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JAN 30
15:26

Vale dam failure drives iron ore

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Seaborne iron ore prices jumped on Wednesday. The key driver remained expectations of cutbacks from Vale.

The Kallanish KORE 62 % Fe index jumped $2.25/tonne to $79.88/dry metric ton cfr Qingdao, now the highest level since March 2017. On the Dalian Commodity Exchange May iron ore settled at CNY 578/t ($85.79/t), up another CNY 22/t, while on the Singapore Exchange February 62% Fe futures settled a sharp $4.21/t higher at $83.98/t. Billet prices in Tangshan remained flat for the fifth consecutive day at CNY 3430/t.

The jump in iron ore prices has also given Chinese imported coking coal prices a little boost as high grades achieve a premium. On GlobalCoal, 75,000 tonnes of branded hard coking coal traded at $203.5/t fob Australia for March shipment. That is up from a deal at $197/t fob on 24 January.

Vale expects a total production stoppage of 40 million tonnes/year of ore including feed for 11m t/y of pellet. That leaves it with the opportunity to surprise on the upside however. Any additional shipment will now be measured against elevated prices for premium ore.