Daily iron ore price update (Simandou slips)

The iron ore complex recovered with a 4% rise in spot prices, led by news that Brazil’s exports of the precious metal (sic) had taken a tumble, combined with another stoppage of the Simandou project in Guinea.

Here are the latest prices:

ING has the skinny on both Australian and Brazilian supply, as Chinese steel output continues to lag:

Australian iron ore supply to edge higher
Australia is in the process of ramping up supply from a number of new projects, of which the largest is BHP’s 80mtpa South Flank mine which started operations in 2021. This follows the startup of Fortescue’s 30mtpa Eliwana mine which commenced operations in late 2020 and has ramped up output since. For this year, Rio’s 43mtpa Gudai Darri mine started operations in June, while Fortescue was meant to start operations at its 22mtpa Iron Bridge mine this year, but the start date of this has been pushed into 1Q23. These new projects, along with some expansion projects, should mean good supply growth from Australia this year and next.

However, so far this year production has disappointed with labour constraints related to Covid-19 impacting operations. This is reflected in export numbers, with exports over the first four months of the year up just 0.5% year-on-year. Although, weaker Chinese demand will also be a factor in these export numbers.

Brazilian shipments suffer this year
Brazil has struggled to see iron ore shipments return to levels prior to the Brumadinho dam disaster in January 2019. In 2021, total Brazilian iron exports totaled 358mt, still down from the almost 371mt exported in 2018. And it would appear that exports in 2022 are going to struggle as well, with cumulative exports over the first five months of the year totaling a little over 122mt, down 8% year-on-year. In fact, February saw Brazil exporting the lowest volumes since February 2014. Weaker exports have been a result of disruptions following heavy rainfall earlier in the year.

Despite the disruptions seen this year, Brazilian miner Vale continues to maintain its production guidance for 2022 in the range of 320-335mt, compared to the production of almost 316mt last year. Looking further ahead, Vale still aims to reach 400mtpa of annual capacity.

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