Iron ore futures advanced again on Thursday amid ongoing supply concerns from Brazil.
Brazilian miner Vale is the subject of an anti-corruption lawsuit; with the company alleged to have hindered inspections at the site of a dam that was collapsed early last year.
Furthermore, it was reported that there had been a sudden spike in Coronavirus cases in the Brazilian state of Para, where around 29% of the nation’s iron ore is produced.
According to the latest production data, Brazil’s iron ore shipments plummeted by 12% on a year-on-year basis. Credit Suisse Group AG estimated that the market is currently at its “peak tightness” and is likely to persist until July. There is some price easing for Brazilian fines as shipments from Brazil is expected to pick up in the second half of the year.
Meanwhile, demand at steel mills remain firm. “Portside iron ore inventories have been continuously hitting new lows, the demand is supported by utilisation rates at mills,” said a Beijing-based iron ore trader. There are however signs that the demand is slowing as rebar mills inventory was up for the first time in over 11 weeks. Furthermore, some physical traders are believed to avoid June index-linked cargoes amid limited resale opportunities in both the seaborne and portside markets.
Futures in Singapore surged during London morning. Jun was seen trading up from 93.6 to 95.0. Cal21 also traded at 77.0 in decent clips.