Daily iron pore price update (Brazil surge)

Texture from Reuters:

“(Iron ore) is getting hit from both sides – softening demand and improving supplies from Australia and Brazil in the second half of 2019,” analysts at ANZ Research said in a note.

Hebei province has issued an “orange” smog alert effective Nov. 1, with pollution expected to be “severe”, the local environment bureau said on Wednesday.

China’s top steelmaking city Tangshan, which is in Hebei, was scheduled to impose second-level pollution measures from as early as Thursday, according to local media.

Nonetheless, spot rose 2.7% to $85 thanks to a dodgy Caixin PMI. No charts today.

The news is all bearish too. Vale is bringing more pain, also from Reuters:

In a securities filing, the company said the resumption of mining activities at Alegria will allow the iron ore exporter to restore 8 million tonnes of 50 million in capacity lost after the collapse of its Brumadinho dam in January caused a series of shutdowns.

Before the shutdown, Algeria had an annual capacity of 10 million tonnes.

The mine’s resumption will add up to 1 million tonnes to production volumes in 2019, but should not impact sales this year, which the company still expects to come in between the lower and midpoint of its previously announced range of 307 million to 332 million tonnes.

And Brazilian exports bounced in October to 31.2mt:

BHP is also readying Samarco:

The world’s largest miner will restart operations at the iron ore mine in Brazil late next year

BHP has approved $44m (£34m, €39m) to restart work at the Samarco iron ore mine in Brazil, following the collapse of the Fundão dam on November 5, 2015, which killed at least 17 people.

The funding will go towards construction of a filtration plant over the next 12 months and the “commencement of operation readiness activities” for restart, the world’s largest miner said.

Last week the Mining Activities Chamber of the State Council for Environmental Policy in Minas Gerais, Brazil, granted a licence for Samarco to restart operations at its Germano Complex.

That’s another 8-9mt within a year. Over that time frame, I expect Chinese demand to fall marginally and supply to lift some 60mt roughly spread between H1 and H2. Then another load arrives in 2021.

Iron ore gunna keep falling, steeply.

Houses and Holes

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.

He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.

Latest posts by Houses and Holes (see all)

Comments are hidden for Membership Subscribers only.