Daily iron ore price update (headwinds mount)

Iron ore prices for June 1, 2019:

Spot splat. Paper worse. Steel is still fine. Rebar inventories are almost exactly the same as last year, healthy. China steel PMI pulled back to 50 in May with new orders down sharply to 46.7.

It appears demand headwinds are mounting amid the trade war and that’s been enough to pop the price panic.

Vale is also making more soothing sounds, via Platts:

The loosening of fragments along the wall at Vale’s idle Gongo Soco iron ore mine in Brazil’s Minas Gerais state should have no impact on the company’s iron ore production levels, the mining giant said Friday.

“First indications are that the material is slipping in a gradual manner … and that the breaking free of the wall should occur without major consequences,” Vale said.

A Vale spokeswoman later said the mine has been inactive since 2016. She added that Vale still expects its total iron ore sales this year to be reduced by 50 million mt to 75 million mt from the originally budgeted sales target of 383 million mt, as announced late March. This follows production curbs that followed the collapse of a tailings dam at Vale’s Corrego do Feijao mine, also in Minas Gerais, causing multiple fatalities and leading iron ore prices to five-year highs.

The excavated area at Gongo Soco and the Sul Superior tailings dam, 1.5 km away, continue to be monitored remotely 24 hours a day by radar, robots and drones. The dam has been under a Level 3 alert since March 22 and the surrounding area was evacuated as a precaution on February 8, Vale said.

And Mining:

Following the collapse of a dam at Vale’s (NYSE:VALE) Corrego do Feijão iron ore mine back in January, the southeastern Brazilian state of Minas Gerais signed a Memorandum of Understanding with tech company Inmarsat to monitor all tailings facilities in the region.

According to Inmarsat, the plan is to provide the state government with a smart monitoring solution which is based on IoT and satellite technology and can provide real-time visibility of conditions at tailings dams.

The technology relies on connected sensors that gather data related to piezometric pressure, pond elevation, local weather conditions and inclinometer readings. These data are aggregated at the ‘edge’ and transferred via a global L-band network to a cloud-based dashboard.

The information in the dashboard then allows companies, auditors and regulators to make decisions related to safety standards.

The panic is not over until Brucutu returns.

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