Iron ore futures went up higher with Vale’s suspension of concentration plant in Brazil, stroking supply concerns in the market.
Thus, the most-traded iron ore for January 2021 delivery on China’s Dalian Commodity Exchange then rose by 1.43% day-on-day to RMB 780.50 per tonne on Tuesday.
The steel rebar contract on the Shanghai Futures Exchange then posted a slight gain of 0.14% day-on-day to RMB 3,536 per tonne.
Vale closes Viga concentration plant
The Brazilian miner had closed its 11,000 tonne per day iron ore concentration plants at Viga after a court ruling, sparkling supply concerns in the market.
The miner announced that it will contest the court decision in a statement dated at Sep 28, as the Viga’s operational activities comply with the requirements for the issuance of the B7 dam operating permit.
Market participants were worried that the recent plant suspension might result unstable iron ore supply from the Brazilian miner. As Vale’s exports began to show some signs of slow down with record of 6.49 million mt over Sep 20-26 period, down 0.23% on weekly basis, according to Platts’ shipping data.
Higher port inventories in September
Despite the supply disruption from Vale, some market participants believed the outage to be on short term basis, due to more shipment arrivals from Australian and Brazilian suppliers.
OCBC bank estimated the combined supplies from Australia and Brazil to exceed by 100 million mt in September, adding on to the existing high port inventory in China.
According to Mysteel, the iron ore ports inventory recorded at 116.16 million mt as of Sep 25, up 1.23 million mt week-on-week.
Moving forward, the port inventory is likely to swell again this week, as Chinese participants went for holidays in early October, which might place pressure for further price upticks.