Heavy rainfall in the iron ore hub of Minas Gerais state, southeastern Brazil, led to mining and railing disruption for Vale and other operators, supporting a recovery in benchmark China iron ore import prices.
According to S&P Global Platts, iron ore prices in China had rebounded in the last few months. Prices earlier in 2021 reached record levels, with a sudden change in spot demand and steel market conditions in China pushing cargo bidding down, ahead of a recovery in forward demand since December.
The increase in iron or followed demand stronger steel production plans and expected stimulus in China after a fourth-quarter 2021 adjustment in output. Brazil is China’s second-largest source of iron ore after Australia.
Strong global steel prices and demand into seasonally weak first-quarter supply may have pushed up prices, with global production outlook and volume keeping stable, S&P adds.
Vale, Usiminas and other mine operators reported halts, including at the Brucutu and Mariana complexes, with a section of the Estrada de Ferro Vitoria a Minas railway for railing ore to Tubarao suspended. Vale’s Southern and Southeastern Systems accounted for around 40% of the company’s iron ore production in the first nine months of 2021.
According to S&P, Chinese and other buyers have become more accustomed to specialized iron ore products and segments for operating efficiencies and blending, as well as pollution control. “Brazil offers low alumina iron ores and grades, which are blended into products such as Vale’s BRBF fines, and ground into concentrates at ports”, it adds.